Microsoft cloud and virtualisation licensing changes

Photo by Alexas Fotos on

Microsoft first announced these changes in May 2022 and, after an update in September, we’ve now got the majority of the info in the October 2022 Product Terms document. Let’s take a look at what’s changed and what it means for us all.

First things first, the Listed Providers:

  • Microsoft Azure
  • Amazon AWS
  • Google Cloud Platform
  • Alibaba Cloud

are not included in any of these changes.

Outsourcing Software Management clause

This is in the “Universal license terms for all Software” which means it applies to all products under this category. There are 3 new elements within this clause:

Flexible Virtualisation Benefit

The Microsoft wording:

Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may use licensed copies of the software on devices, including shared Servers, that are under the day-to-day management and control of Authorized Outsourcers.”

This is similar to the existing “License Mobility through Software Assurance” benefit but doesn’t have the requirement to use an “Authorized Mobility Partner” -rather, you can use any “Authorized Outsourcer” partner…which is any partner that isn’t a Listed Provider.

While much of the focus here is on Windows Server, this new benefit applies to other products such as SQL Server too.

CSP Hoster

The Microsoft wording:

Customers with subscription licenses or Licenses with active Software Assurance (including CALs) may access their licensed copies of software that is provided by a Cloud Solution Provider-Hoster and installed on that partner’s devices.”

Dedicated device outsourcing

The Microsoft wording:

Customers may use licensed copies of the software on devices that are under the day-to-day management and control of Authorized Outsourcers, provided all such devices are and remain fully dedicated to Customer’s use.”

As I say, these apply to all Microsoft Software products and, as we’ll see, individual products may have their own additional terms.

Windows Server – license individual VMs

You are now able to license individual Windows Server virtual machines rather than licensing the underlying physical hardware. As expected, there are a few rules you need to follow:

  • Minimum of 8 core licenses per VM
  • Minimum of 16 core licenses per customer
  • Licenses must have active SA or be active subscriptions – this includes CALs used to access the Windows Server instances
  • Licenses can be re-assigned with the same server farm as often as needed.
  • 90-day rule applies if moving to another server farm/cloud provider

Windows 11

Customers with per-user licenses for Windows 11:

  • Enterprise
  • Education
  • VDA

install Windows 10 Creators Update or later in an Azure VM or a server that meets the requirements in the “Outsourcing Software Management” clause. The QMTH language has been removed from this section too, opening this up to the wider pool of Authorized Outsourcers.

Reading the terms, it appears that the restriction on local virtualisation with CSP licenses has been removed too – bringing them even closer to parity with volume licenses. The language now states that customers can install Windows in a VM running on their Azure or “a server” – which I read as including their own servers as well as those of an authorized outsourcer.

Desktop Applications

For Office/Project/Visio, the word “dedicated” has been removed from the terms which means hosting on shared servers is now possible:

Remote use of the software running on a Server is permitted for any user from a Licensed Device

Microsoft 365

There have been changes to the use rights for the Windows component of Microsoft 365 too. The previous language was:

rights to access and use remote virtualized instances of Windows only apply to Licensed Users that are the Primary User of a device licensed with a Qualifying Operating System.

While it now says:

Licensed Users may only run Windows Enterprise locally on devices with a Qualifying Operating System.”

Removing the primary user requirement to access remote virtual instances. Microsoft say:

Essentially, when licensed as part of Microsoft 365, the requirement to use VDA rights for remote access from desktops without Qualifying Operating Systems no longer applies

There is also a change for Microsoft 365 F3 to loosen the remote virtualisation restriction. The previous clause:

rights to access and use virtualized instances of Windows only apply to Licensed Users of a shared device with a Qualifying Operating System

has been removed.

Microsoft 365 Apps

There is definitely some further clarification needed here. Microsoft released a new licensing guide “Using software products under the Flexible Virtualization Benefit” this month and that document states that the Flexible Virtualisation Benefit applies to Microsoft 365 Apps (formerly Office 365 Pro Plus).

With the introduction of the Flexible Virtualization Benefit, customers’ options for using Microsoft 365 Apps…outside their own data centers are expanded to include any Authorized Outsourcer’s shared servers

However, I can’t find language which clearly states this in the current Product Terms, so for now I’d advise not to get too carried away! I expect we’ll see an update to the Product Terms soon to add that language in – but I’ll update either way once we see something from Microsoft.


This is all pretty exciting for a licensing fan like myself – lots of new language and terms and things to check and understand. Also lots of training presentations to update!

For customers though, I’m not sure how much impact this will really have. Yes, it enables organisations to work with a much larger pool of potential hosting providers…but, in my experience at least, most orgs that are struggling want to work with Amazon AWS…and they’re not included in these changes as they’re a Listed Provider. I’m keen to see what real world impact these changes have and who wins (and loses) from it all.

PS: I’m still processing all this new info so will update with corrections as/if needed!

Further Reading

New Flexible Virtualisation Benefit licensing guide

Windows Server 2022 licensing guide

Product Terms

Windows Server 2012 Licensing Changes

Windows Server 2012 is getting ever closer and today we had some exciting news – changes to the licensing – Yay! This has genuinely got me quite excited Smile

Currently Windows Server has 3 main flavours:

  • Standard / Licensed Per Server
  • Enterprise / Licensed Per Server / Rights to 4 Virtual Servers
  • DataCenter / Licensed Per CPU / Rights to Unlimited Virtual Servers

There are also Web Server, HPC & Small Business Server (SBS) editions.

There are also feature differences between the versions.

Going forward with Windows Server 2012 we will have:

  • Std / Licensed Per CPU / Rights to 2 Virtual Servers
  • DataCenter / Licensed Per CPU / Rights to Unlimited Virtual Servers
  • Each license covers 2 CPUs

Std & DataCenter will have feature parity and the only difference will be the virtual server rights. This is a question I’ve already seen on Twitter:


So it’s good to get an answer straight away.

Features previously not in Windows Server Std that will be with 2012 include:

  • Windows Server Failover Clustering
  • BranchCache Hosted Cache Server
  • Active Directory Federated Services
  • Additional Active Directory Certificate Services capabilities
  • Distributed File Services (support for more than 1 DFS root)
  • DFS-R Cross-File Replication

This follows the same path as the changes recently made to System Center and, while it may make small installations more expensive, overall it reduces costs and simplifies the licensing for end users.

There are 2 other editions of Windows Server 2012 – Essential & Foundation:


As you can see, Essentials & Foundation are aimed at the very small networks and both are limited to 1 CPU. Things which are missing from the lower editions include:

  • Direct Access
  • Hyper-V
  • ADFS

To see the full list of feature differences between the various editions, download the Windows Server 2012 datasheet here:

View Datasheet

Web Server

Windows Web Server can only run web facing workloads but does not require any CALs (Client Access Licenses) which makes it perfect for hosting external sites. However Web Server is being discontinued in the next release but before tales of astronomical rises in costs as companies are forced to buy CALs for every single user of their service:

“Despite the removal of Web Server edition, web workloads running on a Windows Server 2012 edition will continue to receive the “CAL waiver” that is in effect for these workloads today. Windows Server CALs will not be required to access the licensed server if it is only being used to run web workloads”

Software Assurance Transition

If you have active Software Assurance (SA) on Windows Server licenses at the time of release for 2012, you will receive rights to the new versions as per the below:


What about SBS?

Small Business Server has been around for years, combines Windows Server & Exchange Server and is aimed at networks with less than 75 users. Now however it’s time has come to an end…




SBS has quite a thriving community built around it with many passionate advocates, most of whom are sad/angered to see it go. I on the other hand am really rather happy about it! I’ve always found it to be an extra, unnecessary complication when new sales staff/customers get involved with licensing. I realise I’m not going to be popular with that opinion and I’m equally sure that if I worked more in that area I’d have a different opinion but as it is, from the Mid-market & Enterprise space, this is a welcome move.

You can find the full FAQ here:

Find Answers

Microsoft VECD: Diagrams

Microsoft VECD (Virtual Enterprise Centralised Desktops) is their required licensing offering for companies looking to run Virtual Desktop Infrastructure (VDI) setups. For more general info on VDI, see my posts here and here and my VECD post is here.

VECD licensing can be quite confusing to get right for the various different scenarios that might pop up, so Microsoft have made a handy pdf to show how it works for a variety of different possible situations.

Scenario 1:


Scenario 2:


You’ll notice in scenario 2 that although there are 150 VM’s (Virtual Machines) being accessed, you only need to licence the number of machines, in this case 100. You can have an unlimited number of instances (of the OS) stored on the server and each machine can access up to 4 running instances at a time.

Scenario 3:


This is an interesting scenario and I in fact answered a question about this on Twitter just today 🙂 VECD is a device based licence BUT it gives Work at Home (WAH) rights to a specific named user of that machine; this mixing of device/user, while perfectly sensible, does lead to some confusion. These WAH rights help make VECD and VDI nice and flexible.

There are more scenarios on the pdf (which is why my scenario 3 is their 4!) as well as a lot more great info, and you can download it from:

For me at least, I had to save the pdf and then open it; if I tried to open it from the site it gave me an error. It’s down near the bottom, the “VDI Licensing Brochure” mentioned 5 lines from the end 🙂

Microsoft & Virtual Licensing

Microsoft and virtual licensing is definitely a hot topic at the minute. In particular an article written by Paul DeGroot from Direction on Microsoft keeps being re-tweeted on Twitter by all manner of people. Personally, I think people are being a little short-sighted and thus not being quite fair to Microsoft-or the people they’re advising.

Reading this article by Bridget Botelho over at, the crux of it seems to be that Microsoft licensing

 “defeats the purpose of building a dynamic data center”

due to the rules around re-assigning Windows server licences. True, if you’re using Windows Server Std or even Enterprise licences, licence re-assignment has the potential to cause a few issues. However, the example used is of a datacenter…and MS have a product called “Windows Server DataCenter”-which is aimed at customer running a “proper” datacenter. The example DeGroot uses is:

"You might want to run an automated data center with rules like ‘Move a VM when the CPU hits 90%,’ but that move may violate the 90-day rule…”

What’s the problem?

Example A:

Say you are licensed for 3 VM’s on server A and 2 VM’s on server B. The above rule could potentially leave you with 2 VM’s on server A and 4 VM’s on server B. If you’re licensed with Windows Server Std-that would leave you incorrectly licensed.

Example B:

Say you are licensed for 3 VM’s on server A and 4 VM’s on server B. The above rule could potentially leave you with 2 VM’s on server A and 5 VM’s on server B. If you’re licensed with Windows Server Enterprise-that would leave you incorrectly licensed.

However, Windows Server Datacenter gives you unlimited virtual licensing rights-rendering the above examples moot.

Check out this great video explanation:

Other analysts join in:

Chris Wolf from Burton Group said at this year’s VMWorld that “one of the most important changes Microsoft needs to make is to remove the mobility restrictions associated with Standard Edition Windows Server OS licenses”. He goes on to say

“Most enterprises wind up purchasing Datacenter edition licenses as part of a virtualization project…”

and he says this as though it is a bad thing! He only seems to be looking at the upfront costs and basing it on the assumption that there are no benefits associated with Datacenter licensing other than being able to move VM’s around; in my experience that isn’t true.

If a customer were to use Standard licences to cover every VM in their datacenter, It would also slow down expansion as each time you need to deploy a new VM-what do you need to do…that’s right, go and order a new licence.

You urgently need to provision a new server to cope with extra load etc but you haven’t got a spare licence-the proper thing to do is wait until a licence has been ordered from your reseller and then deploy the VM. What will actually happen is that the VM will get deployed anyway and the licence will get ordered after the fact…leaving the company non-compliant but “hey-it’s only for 24 hours” will be the mentality.

Then, once people become familiar with that “process” they may well not bother reporting the new deployment as, let’s be fair, most techies aren’t up on the licensing rules and so might not even realise there’s anything to report. On top of that maybe people will simply forget to mention it or the Asset management guy is on holiday so they’ll tell him when he’s back…but a fortnight’s a long time and it never gets done.

Even with Software Asset Management monitoring is place, it will be a job to keep track of it and may well still lead to non-compliance.

Alternatively, you can purchase Datacenter edition and use as many VM’s as your servers can handle. These days ease of management, and thus a reduction in management costs, is a huge focus for most companies so while Datacenter is more expensive that Std (or Enterprise) it gives cost savings in many other areas.

Wolf also said:

“The leap to licensing per VM instead of per physical machines is going to take a lot of pressure on the company," Wolf said. "But keep holding them to the fire, because it is working."

To me it would seem that licensing per VM would be more expensive, more complicated and more fraught with potential pitfalls. I’d be interested to see what you think on this subject…

Technical Differences:

Also, on a slight side note, Windows Server Datacenter is much more technically suited to that environment with features such as:

  • Hot Add Processors
  • Hot Replace Memory
  • 64 X64 sockets (against 8 for Ent)

when compared to Enterprise and:

Failover cluster nodes

  • Cross File Replication
  • 2TB X64 RAM (against 32GB)
  • 64 X64 sockets (against 4)

when compared to Std.

See more comparisons here.

Impressions of VMWorld

As you may know, this week is VMWorld 2009, VMWare’s virtualization event for partners and customers. I’m not attending but I am following a great number of people on Twitter who are there and I have to say, it’s not doing VMWare much good in my eyes.

The first mark against them was the furore over the restrictions placed on Microsoft & Citrix. Yes-they’re competitors but:

  • Banning them from sponsoring the event
  • Restricting them to 10×10 booths
  • Stopping them from doing demo’s of their product
  • Stopping local hotels from renting conference rooms to them

just strikes me as childish and only serves to make VMWare look worse.

Now I’ll admit that I’m a big Microsoft fan and not much of a VMWare fan but I think even VMWare supporters must be having second thoughts 🙂

In one of the sessions today VMWare displayed a slide to demonstrate Microsoft driver crashes but the slide was 3 years old, and the data was 4 years old!

This attitude of “don’t show competing products", don’t use these rooms, don’t do this, don’t do that” is the same attitude that Microsoft were guilty of displaying a few years back. Microsoft saw a lot of people turn against them, both partners and customers, and it set them back in many areas. Microsoft had to make a real effort to change their corporate attitude from the top down and thanks to that, and the large number of loyal partners/customers, they were able to turn it around…these days MS are recognised by (nearly) everyone as much more open and accommodating to competitors and their products.

I’m not sure that VMWare will be able to make a similar change and, if they do, I don’t think it will be in time to save their market position…

New features and Improvements in Microsoft Hyper-V R2

As I’m sure you’ve heard on the old internet, Microsoft’s Hyper-V R2 is done and dusted. The main new feature is Live Migration, meaning MS can now match the “VMotion” feature offered by VMWare, but there is a whole host of new features and improvements in the latest version. Let’s take a look:


Hyper-V Compare

Hyper-V R2 also includes:

(a) High availability and live migration for managing a dynamic IT infrastructure

(b) Support for 64 logical processors future proofing our customers to scale up with the hardware

(c) Support for running up to 384 virtual machines with up to 512 virtual processors

(d) Processor compatibility mode for live migration across different processor SKU’s from the same vendor

(e) Hot add/remove virtual storage

(f) Networking enhancements (VMQ, Chimney, support for Jumbo Frames)

(g) Simplified management using sconfig

(h) Boot from flash

See the original post here.

MED-V: More info

MED-V (Microsoft Enterprise Desktop Virtualization) is part of the Microsoft Desktop Optimization Pack (MDOP) and has come to the fore somewhat recently, along with Windows 7’s XP Mode.

A number of people had heard of MED-V and knew that it let you run older apps in a virtual environment on new OS’s (such as Windows 7). Then, when MS announced XP Mode for Windows 7 the question became “Why do we need MED-V?”. In short we need MED-V because it’s excellent-so let’s look at why 🙂

XP Mode allows single users to run an app in a local XP VM, and that’s it. It’s a local instance which needs to be looked after by that user/helpdesk but individually on that machine…MED-V however, gives numerous central management controls and that is where it comes into it’s own.

The four key points it offers are:

  • Virtual Image Repository
  • Centralized Management and Monitoring
  • User Policy and Data Control
  • Seamless user experience

Virtual Image Repository: This gives a company a central repository to store all the different virtual images they need (XP, Mac OS, Linux etc) which can then be retrieved by end users and/or automatically deployed. There is also an automated process for keeping the VM’s updated with any changes to the build image. Med-V also allows for automated first-time setup such as:

  • specifying computer name
  • setting up the network
  • joining the domain.

Centralized Management and Monitoring: MED-V can be integrated into Active Directory (AD) to enable VM provisioning based on group policies. There are features aimed at helping Helpdesk too including a central database of all client activity and the ability to easily revert a VM back to it’s original state.

User Policy and Data Control: One of the cool features MED-V offers here is the ability to automatically re-direct specified websites to the Virtual Machine, so if a certain site only runs in IE6 and corporate standard is IE 8, the VM will handle it.

Seamless user experience: Virtual Machine applications are available via the host OS Start menu and apps published via MED-V are still available when offline.

So MED-V is a grown up version of XP Mode that gives corporates the ability to easily, safely and centrally manage a Virtual environment for application compatibility.

All this information is from the awesome free MS e-book “Understanding Microsoft Virtualization Solutions” and there’s a whole lot more in there too…go download it here.

Free Microsoft Virtualization e-book

Microsoft books are usually pretty excellent with great content covering great products in great details…but they can often be pretty expensive too. However Microsoft have made available, for free-yep completely gratis-a wonderful e-book on their Virtualization technologies. Called “Understanding Microsoft Virtualization Solutions”, it covers:

  • Hyper-V
  • App-V
  • MED-V
  • Virtual Machine Manager (VMM)

and more…and is fantastic! It’s full of great information, how-to’s & descriptions aswell as diagrams such as:


Go and download right now here.

Microsoft Virtualization Questions


Through the awesomeness that is Twitter, I’ve managed to connect with some of the Virtualization experts who work at Microsoft HQ in Redmond. They’ve very kindly offered to answer any and all questions that you guys can think of…as long as it related to Microsoft virtualization 😉

The main thing people think of with this is Hyper-V and, while that will be a big part of this, there are other elements too. Things such as:

  • Application Virtualization (App-V)
  • Presentation Virtualization (TS/RDS)
  • Desktop Virtualization (VDI)
  • XP Mode
  • MED-V
  • Virtual PC

However, as well as product/feature specific questions, if you’re wondering about Microsoft’s long term strategy etc-please ask too.

This is a great chance to get your feedback directly to MS HQ and to get those burning questions answered straight from the horses’ mouth 🙂 We’re hoping to get this Q & A done by the end of this month (August) so please, add your questions in the comments below and we’ll get started!!!




MED-V or Microsoft Enterprise Desktop Virtualization is like SUPER XP mode 🙂

As great as XP Mode is, it has caused a few problems where people are now wondering if MED-V has been replaced-it hasn’t.

First up-MED-V is used for virtualizing legacy applications so they can be run on new OS’s like Vista and Windows 7. Yes that sounds a lot like XP Mode but MED-V introduces a whole extra management layer for use in the corporate world-specifically:

“MED-V provides important centralized management, policy-based provisioning and virtual image delivery to reduce the cost of Virtual PC deployment”

Stephen L Rose has got a great post over on the Windows Team Blog about the differences between these 2 technologies so, rather than re-invent the wheel I’m going to respectfully copy & paste 😉

How does MED-V adds management to Windows Virtual PC?

To provide a managed, scalable solution for running virtual Windows XP applications, MED-V addresses many of the IT challenges around deployment and management including:

  • Deployment – deliver virtual Windows images and customize per user and device settings
    • Automate first-time virtual PC setup based on an IT customized script – including assignment of a unique computer name, joining to AD domain
      (for instance: assign the virtual PC a name that is derived from the physical device name or the username to simplify identification and management)
    • Adjust virtual PC memory allocation based on available RAM on host, so that the virtual PC does not take significant resources from the user
  • Provisioning – define which applications and websites are available to different users
    • Assign virtual PC images according to users and groups
    • Define which Windows XP applications will be available to the user through the start menu
    • Define which websites (e.g. internal sites that requires a previous version of Internet Explorer) are redirected automatically to Windows XP
  • Control – assign and expire usage permissions and Virtual PC settings
    • Control the network settings of the Virtual PC (e.g. whether it connects through NAT or DHCP, whether its DNS is synchronized with host)
    • Authenticate user before granting access to the Virtual PC
    • Set expiration date, after which the Virtual PC is not accessible to the end user
  • Maintenance and Support – update images, monitor users and remotely troubleshoot
    • Update images using TrimTransfer network image delivery – update a master Virtual PC image, and MED-V will automatically distribute and apply the changes to all endpoints
    • Centralized database aggregates events from all users, and provides troubleshooting information on malfunctioning virtual PCs
    • Administrator diagnostics mode allows faster resolution of Virtual PC issues
    • Run on multiple platforms – MED-V will work on both Windows 7 and Windows Vista, and will not require processor-based virtualization support

MED-V is available only as part of MDOP and thus is only available to certain volume licence customers with active Software Assurance.

This technology builds on Microsoft Virtual PC and the new version has got some great new features including:

USB Support: Access USB devices connected to your Windows 7 machine directly from the Virtual Machine.

Clip Board Sharing: Copy and paste between your Windows 7 desktop and your Virtual desktop.

Printer Redirection: Print directly from your Virtual PC.

More can be found over at The Windows Team Blog.

%d bloggers like this: