Microsoft has Made Hosting VDI Less Expensive with Windows Server 2012

Bottom Line: If Hyper-v is being considered as an option to host VDI desktops, consider utilizing Windows Server 2012 Standard edition and buying Windows Server 2008 R2 with Software Assurance before the release of Windows Server 2012. 

With the upcoming Introduction of Windows Server 2012 (September 4, 2012), Microsoft has reduced the number of server software editions that offer hypervisors (Hyper-v) to two: Standard and Datacenter editions.  Microsoft has also modified the licensing of the software by making both server editions processor based licenses.  Windows Server 2012 Standard’s functionality has been elevated to match the Datacenter edition by providing parity between the two editions with the exception of virtualization rights and licensing cost.  A Standard license permits up to two server virtual machines to operate on two processors of a server, while the Datacenter license allows the utilization of two processors by an unlimited number of server virtual machines running on a server.  Though the Datacenter edition permits unlimited server virtualization, the functional parity between the Datacenter edition and Standard edition allow the Windows Server 2012 Standard edition to host virtual desktops for one fifth the cost of Datacenter edition.  Through these modifications, Microsoft has made the hosting of the Virtual Desktop Infrastructure (VDI) desktops utilizing Hyper-v less expensive and more competitive with other competing VDI solutions.  This post will explore these changes and discuss why these changes have made VDI desktops hosted on Hyper-v, more affordable.   

Hosting VDI under Windows Server 2008 R2

Microsoft commercially markets Hyper-v as one of the roles within the Windows Server operating system and may be used to host server or desktop virtual machines.  Since the release of Windows Server 2008 R2 edition, Microsoft increased the functionality of Hyper-v to provide the capability of hosting VDI desktops.  VDI was possible on three editions of Windows Server 2008 R2; Standard, Enterprise, Datacenter. Though VDI was possible with the least expensive server licensing option, Windows Server 2008 R2 Standard edition, it programmatically constrained memory usage to 32 gigabytes.  This memory constraint reduced the Standard edition’s performance ability to everything beyond the implementation of a small number of desktops.  The Enterprise and Datacenter editions, on the other hand, were capable of managing up to two terabytes of memory, which provided a platform for a large scale deployment of VDI. 

Hosting VDI with Windows Server 2012

After the release of Windows Server 2012, Microsoft will be marketing only two server editions with Hyper-v, the Standard and Datacenter editions.   Because the past technical constraints that have kept the Standard edition from being considered for a VDI roll-out are no longer an issue, both of these editions will be considered viable VDI host options.  The Datacenter and Standard editions of Windows Server 2012 are both processor based licenses with a license from either edition covering two physical processors on the assigned server.  There are two major differences between the two editions; the first difference is in how many virtual server instances may exist on a server licensed under the two editions.  A Windows Server 2012 Standard edition license provides the right to execute two virtual server machines with two processors.  The Windows Server 2012 Datacenter edition license entitles the owner to run an unlimited number of server virtual machines with two processors.  The second significant difference is in the cost of licensing each processor on a server.  A Windows Server 2012 Standard license will cost $882 (retail) or each processor may be licensed for $441.  The Datacenter license will cost $4410 or $2205 per processor meaning that it will cost five times the amount to license a processor using Datacenter than it does if a Standard edition license is used.  Assuming that Microsoft does not add any licensing restrictions to using the Windows Server 2012 Standard edition hypervisor for VDI, the cost of hosting VDI desktops on the Windows Server Standard edition will be one fifth the cost of the Datacenter option.  Though there are other components required for a Microsoft VDI solution, this reduction in cost makes the Microsoft VDI option more competitive with other VDI providers.  

Windows Server 2012 Hyper-v licensing cost per Virtual Desktop Chart

The following chart provides an analysis of the cost per virtual desktop assuming that six virtual desktops may be active on one processor core.  Within the chart, three examples of the Hyper-v software licensing costs are provided. The first example is entitled “Windows Server 2008 R2 Standard with Software Assurance Upgraded to Windows Server 2012 Standard” and includes the virtual desktop costs assuming that the Software Assurance license grant for Windows Server 2008 R2 Standard on four processor servers has been enacted (this was discussed in the blog posted on August 16, 2012).  The second option provides the cost for Windows Server 2012 Standard purchased after the September 4, 2012 release and the third option provides cost information for VDI running on Hyper-v licensed through Windows Server 2012 Datacenter. Within each example there are the following four rows of information:

·         Licensing costs per server

·         Cores per server

·         Virtual Desktops executing per server (Assuming six desktops per core)

·         Cost per Virtual Desktop (Not accounting for high availability)

Each of the three examples has cost information for a two processor server and a four processor server as denoted by the labels on the first row of the chart.  Under the two and four processor server labels in the first row are four columns which provide cost for processors with either four, six, eight, or ten cores per processor. 

		Two Processor Licensed Server				Four Processors Licensed Server
Hypervisor Licensing options		Four cores per procsr	Six cores per procsr	Eight cores per procsr	Ten cores per procsr	Four cores per procsr	Six cores per procsr	Eight cores per procsr	Ten cores per procsr
1. Windows server 2008 R2 Standard with Software Assurance Upgraded to Windows Server 2012 Standard - Lowest cost option per Virtual Desktop	Licensing costs per server	$726.00				$726.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Costs per Virtual Desktop not accounting for high availability	$15.13	$10.08	$7.56	$6.05	$7.56	$5.04	$3.78	$3.03
2. Windows Server 2012 Standard purchased after the September 4th release	Licensing costs per server	$882.00				$1,764.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Cost per Virtual Desktop not accounting for high availability	$18.38	$12.25	$9.19	$7.35	$18.38	$12.25	$9.19	$7.35
3. Windows Server 2012 Datacenter	Licensing costs per server	$4,810.00				$9,620.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops  executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Cost per Virtual Desktop not accounting for high availability	$100.21	$66.81	$50.10	$40.08	$100.21	$66.81	$50.10	$40.08

Interpreting the Chart

 The third option in the chart demonstrates that virtual desktops on the Windows Server 2012 Datacenter edition are significantly more expensive than either of the first two options which utilize the Windows Server 2012 Standard edition.  Unless there is licensing restriction announced with the release of Windows Server 2012 Standard edition, constraining VDI virtualization, the use of Datacenter should be avoided.  Assuming the Datacenter option should be avoided for hosting VDI desktops, attention should be given to the use of Windows Server 2012 Standard edition (options one and two in the chart).  The major difference between option one and option two is that the Windows Server Standard license costs will increase by more than an additional twenty one percent with the introduction of the Windows Server 2012, as reflected in option two.  With the pending price increase for Windows Server Standard edition, if Hyper-v is being considered as a VDI hosting option, the better cost option is to purchase Windows Server 2008 R2 licenses with Software Assurance(option one) and then host VDI desktops on Windows Server 2012 Standard.  The first option from the chart will also further provide the owner of a Windows Server 2012 license assigned to a four processor server with the option to execute a server self-inventory in order to qualify for an additional Windows Server License.  The additional license gained will further reduce the hypervisor licensing cost for hosting a VDI desktop, as demonstrated in the chart, with costs per virtual desktop going as low as $3.03.                     

Windows Server 2012 temporary license grant oportunities

Bottom Line:  Entities can avoid licensing costs while migrating to Windows Server 2012 if they plan now for their future hardware and software needs and take advantage of the special temporary licensing grants that exist.

Starting in April of this year, Microsoft released a new version of their System Center product.  This was the first in what will be a series of new server products versions that Microsoft will release throughout this year and into next year.  Along with the release of the new server software, Microsoft has also been changing the licensing of each product released.  Those aware of the licensing grants being extended by Microsoft will find opportunities to avoid cost while gaining server software licensing.  Over the next few blog posts we will examine license grant opportunities that may be taken advantage of during the migration to Windows Server 2012, System Center 2012, and SQL Server 2012.  Windows Server 2012 will be the subject of this post followed by a post which will examine how the Windows Server 2012 feature and licensing changes will reduce the cost of hosting virtual desktops on the Windows Server Hyper-v platform.        

Windows Server 2008 R2 to Windows Server 2012 Licensing

Windows Server 2008 R2 is licensed under two models in the Volume License programs, the Server plus Client Access License (CAL) model, and the Processor plus CAL model.  The Datacenter and the Itanium editions are governed by the Processor plus CAL licensing, while the Enterprise and the Standard editions are governed by the Server plus CAL licensing.  Under the 2008 R2 Processor plus CAL licensing, each physical processor on a server must be licensed and the server can have no less than two processors.  With the 2008 R2 Server plus CAL licensing, each server must be assigned a license.  The Windows Server 2008 R2 Standard Edition is limited to managing four physical processors, while the2008 R2 Enterprise Edition Software can operate up to 8 processors.  

With the introduction of Windows Server 2012 there will be only two editions, Standard and Datacenter, both of which will operate under the Processor plus CAL based licensing.  Each Windows Server 2012 license will cover up to two processors on a server as opposed to one processor under the 2008 R2 processor licenses.  Unlike the editions from the 2008 R2 version, both 2012 editions will have the same features sets.  The difference in the editions will be with how many virtual machines may run as dictated by a given edition’s license.  A Windows Server 2012 Standard edition license will allow up to two virtual machines utilizing two processors while the Windows Server 2012 Processor edition license will allow an unlimited number of virtual machines to utilize two processors. 

Windows Server 2008 R2 to Windows Server 2012 Software Assurance migration rights

 Holders of Windows Server 2008 R2 licenses, which are covered by Software Assurance (SA), will be granted Windows Server 2012 licenses as follows (also see Windows Server 2008 R2 to Windows Server 2012 Software Assurance conversion table below).  Both of the server based editions, Enterprise and Standard, will migrate to processor based editions and will automatically translate as follows.  Windows Server 2008 R2 Standard edition licenses will convert to Windows Standard 2012 version on a one-to-one ratio, while the Windows Server 2008 R2 Enterprise edition will receive two Windows Server 2012 Standard edition licenses for each license covered by SA.  The Windows Server 2008 R2 Datacenter covered with SA will be migrated to Windows Server 2012 Datacenter but will require two Windows Server 2008 R2 Datacenter licenses for each Windows Server 2012 Datacenter license granted.  Windows Server Itanium Based edition will be discontinued with the introduction of Windows Server 2012.  Thus, Microsoft will grant the holders of the Windows Server 2008 R2 Itanium Based licenses a Windows Server 2012 Datacenter edition license for each Itanium license covered by SA.  During the transition of Standard and Enterprise editions from Server plus CAL to Processor plus CAL, Microsoft is providing customers with a grant for additional licenses if the previous mentioned grants do not adequately license their servers.    This means, for the Standard edition licenses, if the software exists on a four processors server, the license owner is entitled to an additional, no cost, Windows Server 2012 Standard license.  Any Windows Server 2008 R2 Enterprise Edition covered with SA that exists on an eight processor server may qualify for two additional, no cost, Standard Edition licenses.  In order for the licenses to qualify for the additional licenses, the customer must conduct a self-audit before the renewal the Volume License Agreement under which the licenses are maintained, using an inventory tool that records the processor count for the Windows Server installation.              

Windows Server 2008 R2 to Windows Server 2012 Software Assurance conversion table

WS 2008 R2 Server edition	WS 2012 Server edition	2008 R2 to 2012 license conversion ratio	Additional grant requirements
Standard	Standard	1:1
Enterprise	Standard	1:2
Datacenter	Datacenter	2:1
Itanium	Datacenter	1:1
Standard on a 4 processor server	Standard	1:2	Requires self-inventory of server hardware
Enterprise on an 8 processor server	Standard	1:4	Requires self-inventory of server hardware

Actions to be considered

The most of the previously discussed license migration paths automatically provide the customer with a specific number of licenses without any further action beyond having the Windows Server 2008 R2 license covered by SA.  As mentioned earlier, it is possible to qualify for more licenses for the Standard edition and Enterprise edition licenses if the automatic conversion will not cover the number of processors in the server.  In order to qualify for additional licenses a self-inventory must be done with Microsoft Assessment and Planning (MAP) Toolkit or different inventory tool that can report a time/date-stamped inventory of the number processors on the server with Windows Server installations.  The assessment must occur before the existing agreement is renewed; otherwise the conversion will default to the standard conversion ratio.  If an upgrade to new servers with more processors is being considered in the near future, the acquisition of the hardware before the renewal of the Volume License Agreement would allow the customer to take advantage of this license grant.  Otherwise, the same hardware purchase after the agreement renewal date would require the purchase of additional Windows Server Standard licenses. 

In the event that a customer owns Enterprise edition licenses and they do not want to have the Standard edition license that will routinely occur during the conversion between Windows Server 2008 R2 and Windows Server 2012, they can perform an edition step-up.  A step-up allows the owner of the license to upgrade an existing license covered by SA to the next edition level up by paying the difference in the price of the two editions.  In the case of this Enterprise to Datacenter edition step-up, it must occur before the release of Windows Server 2012.  After the release of Windows Server 2012, the Enterprise edition and the related step-up will no longer be on the Microsoft pricing sheet and therefore will not be permitted.

This final option for action is one that is not promoted by Microsoft, but could greatly benefit any organization that takes advantage the license grant.  In December 2010, after Microsoft had announced that they would discontinue the Windows Server Itanium edition, they posted that they would grant licenses covered with SA with a license of the next version of Datacenter.  Presently the Window Server 2008 R2 Itanium License may be acquired for the same price as the Windows Server 2008 R2 Datacenter license.  Two Windows Server 2008 R2 Datacenter edition license are required in order to migrate to the Windows Server 2012 Datacenter edition, but only one Windows Server Itanium edition license is needed for the conversion.  This means that until the release of Windows Server 2012, a Windows Server 2008 R2 Itanium license with SA may be purchased and one Windows Server 2012 Datacenter license will be granted.  In effect, for a short time, Windows Server 2012 Datacenter may be acquired for half price. 

Mirrosoft is about ready to release restrictions on their Windows Desktop OS (4th post in a series of 4)

Bottom Line: With the release of Windows 2012, Hyper-v 3.0 and System Center 2012 SP1, Microsoft will have the final pieces in position to support desktop in the cloud and will be changing the licensing of Windows desktops to allow them to be hosted on shared equipment.   

This final post, in a series of four posts, will examine why Microsoft will be changing their licensing to make Desktop as a Service (DaaS) a more practical solution for businesses.  Microsoft will be making this licensing change at the end of this year or the beginning of next year to coincide with their upcoming product releases.  The capabilities with the product releases will provide, what Microsoft believes, are the four basic attributes of a cloud solution:

· Shared Services

· Usage-based Chargeback

· Scalable and Elastic Services

· Self-Service

As examined in the third post of this series, Microsoft, like many software companies, utilize licensing restrictions to control the market while they are building products that can compete with competitors’ solutions.  The existing Windows desktop licensing restricts the placement of the Windows desktop OS from tenant-shared equipment at hosting facilities.  This licensing restriction is in place because Microsoft does not have the software developed to fully manage this service.  Microsoft is under pressure to provide a cloud desktop solution and release the related licensing restrictions.  If they do not act quickly, they will risk losing the market advantage to competitors that are currently providing an alternative to a centralized desktop through their offering of applications in the cloud.  One such example of cloud based application service is through Google’s “App for Business”.  The remainder of this post will examine each of the four attributes of the cloud and the related product enhancements that Microsoft will be introducing to enable these capabilities.

Share Services

Shared service is a primary attribute that provides the efficiencies needed to make a DaaS solution the desired option for implementing a VDI solution.  The sharing of services provides the tenants of a DaaS solution with reduced start-up and ongoing costs in the following the areas:

· hardware

· software

· human resources

A prerequisite to a shared hardware DaaS solution is the host must be able to provide a secured isolated environment for each tenant.  This is a capability that Microsoft is making available with Hyper-v 3.0 which is slated to be introduced with Windows Server 2012.  With the release of Hyper-v 3.0, Microsoft has introduced the capability to support Private Virtual Local Area Network (PVLAN).  A PVLAN provides the capability to isolate Virtual Machines (VM) that exist on the same Virtual Local Area Network.  This allows the capability to place VMs of multiple tenants on the same Virtual Network in a secure manner while keeping them isolated as if they were on their own network.  Hyper-v 3.0 also provides the capability to control levels of network bandwidth to a VM or a group of VMs.  This provides the service provider with the capability to provide tenant with minimum levels of service on a shared network.

The ability to create a multi-tenant environment, such as the one provided by Hyper-v 3.0, also requires the tools to manage the multi-tenant environment.  Microsoft has announced the next release of System Center 2012 SP1, which primary objective is to provide the management of the new features provided with the Hyper-v 3.0 release.  The prerequisites of having the ability to offer a managed, secured, isolated, multi-tenant virtual environment to provide an efficient cloud service will be met by both the future releases of Hype-v 3.0 and System Center 2012 SP1.

Usage-Based Chargeback

In addition to providing a shared network, Hyper-V 3.0 will also provide the capability to meter resources being utilized on a shared network. Metering will provide the capability of charging tenants a fee based on the amount of resources they utilize. It is anticipated that with Hyper-v 3.0 hosting facilities will be able to monitor resource utilization based on each VM’s: CPU utilization, memory utilization, network utilization, and disk storage utilization.  System Center 2012 SP1 is expected to provide enhanced reporting based on the metering from Hyper-v 3.0 in order to show resource usage by each tenant.  This will provide the DaaS hosting facilities with the capability of charging each tenant for resource utilization down to the individual VM, desktop. 

Scalable and Elastic Services 

In order provide a scalable and elastic services, Microsoft will need to provide ample capacity to run a virtually unlimited number of desktops.  This will be done with both their data facilities, through their “Azure” offering, and through hosting service providers. With the release of System Center 2012 SP1, the management of a DaaS solution would be possible through both the Microsoft hosting solution, Azure, and also the non-Microsoft hosting service providers.  Through the System Center 2012 SP1 add-on, Service Provider Foundation, Microsoft is delivering to service providers the capability to offer and manage DaaS offerings using Microsoft’s management tools.  This allows for a scalable and elastic supply of DaaS in the cloud through both Microsoft’s Azure and third-party hosting facilities.

Self-Service

Microsoft is providing self-service management tools to enable the management of desktop from a remote location.  This is being done with a new offering within their System Center 2012 Suite, App Controller, which takes a VM (desktop application) created locally and distributes it remotely to a hosting facility.  System Center 2012 SP1 provides the capability to create a “template” locally with all the application and configuration needed and then App Controller can install the desktop remotely.  When System Center 2012 SP1 is released this capability will support virtual desktops at either a Microsoft Azure facility or at a third-party hosting facility that supports System Center 2012 SP1.  This approach will complement the pending release of Windows 8 which will come with a copy of Hyper-v 3.0.  The existence of Hyper-v 3.0 in both the local and remote locations will provide consistent environments where the virtual desktop may be both developed and deployed.   Meaning, an organization could create a desktop VM locally on Hyper-v 3.0 included with the Windows 8 OS and the move the desktop to a similar hypervisor in the cloud.  

In addition to installing virtual desktops, there exists the need to monitor and manage the desktop on an ongoing basis.  App Controller, along with other System Center 2012 SP1 products provide for both the capability to monitor and manage the cloud based desktop.  Additionally, cloud based desktop management has been made available to customers through Intune, which was released by Microsoft last year.  Intune provides the owners of desktops with remote desktop management capability of both physical and virtual desktops.  The Intune product provides the owners of a desktop with the ability to complete the following basic management tasks; update software, patch software, protect desktops with anti-virus, basic policy changes, and asset management.  Two weeks ago, on June 11, 2012, Microsoft released Version 3 of Intune which allows user access to an application self-service portal so that they apply application to their own remote desktop.  Intune and the tools provided with the future release of System Center 2012 SP1 will provide tools needed for customer self-service in a cloud environment.

Conclusion

With all of the capabilities explained in this post, one could argue that Microsoft is making the changes to Hyper-v and System Center to provide cloud services for their server systems only.  If that is all that Microsoft intended, they would be walking away from a large potential revenue stream from companies that may not have the resources to implement an on-premise VDI solution.  It would also be ignoring the fact that Microsoft’s competitors that are providing cloud-based applications are endangering the future of Microsoft’s Desktop as it has exists today.  The licensing changes to make Microsoft’s desktop OS more accessible in the cloud is not a luxury for Microsoft, but rather a necessity in order to extend the life of their desktop given the competition from cloud-base application providers.  Making changes to the licensing to make DaaS a practical solution for companies are a benefit to Microsoft, but only if they have the tools in place to either provide the service themselves, or provide the management software to other hosting providers.  Much like the restrictions Microsoft placed on license mobility before they had a virtualization tools in place, Microsoft has placed restriction on shared desktops at hosting facilities.  With the release of Windows 2012, Hyper-v 3.0 and System Center 2012 SP1, Microsoft will have the final pieces in position to support desktop in the cloud and will be changing the licensing of Windows desktops to allow them to be hosted on shared equipment.        





   

Microsoft becomes competitive in the virtualization market (3rd post in a series of 4)

Bottom Line

Over the last seven years Microsoft has been working toward providing a competitive virtualization offering.  During that time, until they had a solution in place, Microsoft restricted mobilization rights but then subsequently released the restriction once they had a competitive product.  Similar to how Microsoft utilized licensing to restrict server license movement not having a virtualization solution, they are making Desktop as a Service (DaaS) less appealing through licensing restriction.  Once Microsoft has the components needed to provide Desktop as a Service at a hosting facility on shared hardware, they will be releasing the related licensing. 

Overview

Many times software companies such as Microsoft utilize software licensing to not only dictate how their software may be used by customers, but also use licensing to limit their competitors in areas that they are not ready to compete.  One such example of this is how Microsoft has made it impractical for organizations to move their virtual desktops to an 3^rd party hosting service by prohibiting the use of the Windows Desktops Operating Systems on equipment shared between hosted tenants.  This restriction reduces the likelihood that their competitors cannot provide the Windows Desktop in the cloud before Microsoft is ready to market a solution.  Before Microsoft is able to provide this solution, Desktop as a Service (DaaS), they need to provide two major components:

·         An industry-competitive virtualization solution

·         An infrastructure to host and manage desktops

Over the last seven years, Microsoft has gone from having no competitive virtualization solution, to having developed a viable virtualization offering.  To protect their revenue stream during this time, Microsoft placed a licensing restriction on their software in order to diminish the negative impact of competitors’ virtualization solution.  These restrictions have provided Microsoft time to create the software needed to develop a virtualization solution of their own.  Once Microsoft was able to provide the virtualization software, they released the virtualization restriction and marketed the solution in such a way that would improve their future revenue stream.  One could argue that Microsoft is utilizing the similar licensing restriction approach until they have a suitable DaaS solution in place.  The specific DaaS licensing restrictions will be the subject of the next posting, this posting will instead offer insight to where Microsoft put licensing restrictions until they had developed a market-competitive hypervisor that could provide a suitable virtualization solution.  Please use the timeline at the bottom of the post for reference while reading the following.

Microsoft Restricts Movement of Server Licenses

As shown in the timeline below, there are two timeframes during which Microsoft changed the licensing while they developed a virtualization solution.  The first is represented by the box on the left side of the timeline which is labeled “Microsoft Restricts Movement of Server Licenses”.  During 2003 Microsoft entered the virtualization race with the purchase of Connectix, which provided Microsoft with the virtualization technology in which they could further build their own technologies.  Though this purchase provided Microsoft with a PC based virtualization solution immediately, it did not provide them with a competitive server based hypervisor.  Later in November of 2003, VMware, who had been marketing a server hypervisor for two years, released VCenter with VMotion which delivered the capability to move Virtual Machines (VM) from one physical server to another.  With the existing hypervisor, VMware had granted their customers the capability of running a data center more efficiently by allowing multiple operating systems on one server.  Additionally, once VMWare introduced VCenter with VMotion, they reduced the Microsoft’s ability to provide data centers management tools by providing their customers with a way to manage the data center through the movement of VMs.  As a result, in December of 2005, Microsoft, who was still over two years away from releasing a server based hypervisor, invoked licensing restrictions against moving server licenses any more often than once every 90 days.  With this move, Microsoft protected their revenue stream by requiring that the original and destination server both be licensed in the event that a VM was moved more often than once every 90 days. This restriction ensured that the owner of a VMWare solution could not freely move a VM with Microsoft server software as they once could before the licensing restriction.   One could argue that Microsoft had this restriction in place to dampen customer benefits that could be experienced with VMotion until Microsoft was closer to introduce a competing product.

Microsoft Releases Movement of Server Licenses

During the second timeframe denoted in the timeline below by the box on the right labeled “Microsoft Releases Movement of Server Licenses”, Microsoft removed the server license mobility restrictions after the introduction of a virtualization solution.  In March of 2008, Microsoft introduced their first industry standard server virtualization tool, Hyper-v, which was a hypervisor, bundled in the Windows Server 2008 product.  This version of Hyper-v had a feature called Quick Migration which could move virtual machines from host server to host server, but with a noticeable interruption in service during the move.  In 2009, with the release of Windows Server 2008 R2, the Live Migration function became available, which enhanced the capability of moving a virtual machine from one host to another without a noticeable interruption, similar to the capability provided by VMotion.  Between the release of these two versions of the Windows Server, Microsoft released the restriction against moving many of their server licenses more often than once every 90 days.  This was extended through a right called “License Mobility within Server Farm”.  At that time, License Mobility within Server Farms provided the license owner, who purchased under a volume license agreement, the right to move an assigned license from one server in a server farm to another in the same server farm without restriction.  This right was only extended to “enterprise” grade servers which excluded some server editions such as SQL Server Standard edition.  Upon the release of SQL Server 2012, Microsoft extended the License Mobility within Server Farm right based on whether the license is covered by Software Assurance.  It has yet to be seen whether or not Microsoft will continue to remove license mobility restrictions on all servers covered by Software Assurance, but they seem to be continuing the trend toward releasing the restrictions that have been in place since 2005.

Conclusion

 Over the last seven years Microsoft has been working toward providing a competitive virtualization offering.  During that time, until they had a solution in place, Microsoft restricted mobilization rights but then subsequently released the restriction once they had a competitive product.  Similar to how Microsoft utilized licensing to restrict server license movement not having a virtualization solution, they are making Desktop as a Service (DaaS) less appealing through licensing restriction.  Once Microsoft has the components needed to provide Desktop as a Service at a hosting facility on shared hardware, they will be releasing the related licensing. 

Microsoft Defines the Components Needed for Public Cloud Hosting. (2nd post in a series of 4 posts)

Bottom Line:  Once Microsoft has the software in place to manage Virtual Desktop Infrastructure (VDI) in the public cloud, they will change their licensing to make a hosted VDI a reasonable option for organizations.

Throughout the last few years I have heard many complaints that Microsoft has made it impractical for organizations to have their desktops hosted at an offsite service.  Presently, Microsoft’s licensing makes hosted VDI solutions unreasonable because prospective tenants may only run their virtual desktops on physical servers that they own.  This requirement makes VDI less attractive to organizations because it restricts the efficiencies gained though sharing resources between multiple tenants.  The sharing of resources is one of four attributes, listed below, that Microsoft intends to provide in a cloud solution:

·         Shared Services

·         Scalable and Elastic Services

·         Self-Service

·         Usage-based Chargeback

The premise of these four blog posts is to show that Microsoft does not have the software in place to provide these four attributes at this time, but once they do, they will change their licensing to allow VDI in the public cloud.  I predict that these capabilities will be in place in the next six to ten months and Microsoft will be changing their licensing in concert with the release of the toolset.  The following will further explain the above four attributes and the benefits that they provide through a hosted facility.

Shared Services – This is one of the primary attributes that makes VDI at a hosted facility more economical than companies hosting VDI at their own facility.  The sharing of the following three assets with other tenants reduces the start-up and ongoing costs compared to a non-shared solution:

·         hardware

·         software

·         human resources

 Much like the process of server operating systems virtualization allowing reduced hardware costs, cloud VDI provides a platform for shared equipment between multiple tenants allowing a similar reduction in hardware costs.  Without the ability to share equipment between tenants, each tenant would be required to run their own hardware at a lower capacity, increasing the costs of each individual tenant.  The sharing of software provides the opportunity to reduce the tenants’ costs by avoiding the direct upfront purchase of software.  For example, a tenant could avoid the need to purchase desktop management software by appointing the hosting facility to manage the desktops on their behalf.  Another benefit of placing VDI in the cloud can be realized by sharing the human resources required to implement and maintain a VDI solution.  The implementation and ongoing maintenance of a VDI solution requires a specialized skill set that would be better suited in an environment where that talent could be shared across multiple tenants rather than each tenant employing their own set of employees.  

Scalable and Elastic Service – One of the risks to self-hosting a VDI solution is the shifting demands on an infrastructure while an organization increases the number of desktops.  The infrastructure required for each phase of a VDI implementation could be different than the network configuration of the previous phase.  As an example, a company could complete a successful VDI proof of concept and receive permission to proceed with the VDI solution.  Once they implement additional virtual desktops they may find that the infrastructure used to provide a successful proof of concept will not sustain a slightly larger audience.  The need to replace the existing infrastructure to support the additional users of a VDI solution could require an unplanned request for capital.  This same scenario could occur multiple times when the VDI implementation hits another infrastructure threshold.  For an organization that is unaware of these dynamics, the repeated request for more money could create the appearance that a project is out of control.  The entity could elect to avoid the repeated request for capital by initially building the final infrastructure needed for a fully implemented VDI solution, but this approach would require a large initial capital expenditure.  Though this all-or-nothing approach removes the inefficiencies of both repeated infrastructure rebuilds and requests for capital, it provides a greater exposure to risk in the event that the implementation is unsuccessful.   A hosting facility, on the other hand, already has the infrastructure in place to provide a virtually unlimited number of new desktops to a tenant at a consistent cost per desktop.  Thus, a hosted VDI solution avoids both issues related to a self-hosted VDI solution because the costs depend on number of implemented desktops and resources used, providing predictable cost throughout the addition of virtual desktops. 

Self-Service – Having the unlimited desktop capacity available that off-site Microsoft servers could provide is more beneficial to a tenant if routine requests can be both made directly by the business unit and also fulfilled quickly.  Microsoft’s vision is to provide software capable of executing routine tasks for the tenant, such as allocating a desktop, without the delays to which they have become accustom.  For instance, a Marketing Department may request that a desktop be set up with the tools required for a given person.  Rather than making a request for a physical desktop and waiting for days or weeks to receive the requested desktop, the Marketing Department would submit a request for a new virtual desktop and receive it with the underlying infrastructure configured immediately.  This would provide the end user with the capability of requesting and receiving desktops as they are needed.

Usage-based Chargeback – This final attribute provides the hosting facility the capability to charge their shared equipment tenants based on the resources that each tenant utilizes.  Without having the capability of reporting on each tenant’s resource usage, the hosting facility cannot bill their individual tenants and would not be able to provide a shared environment.

What is next - Until recently, Microsoft has been focused on improving their virtualization offering.  Recently, they have turned their focus to providing the functionality within their products that will provide the capabilities listed above.  The next, third, posting will cover the progress made related to Microsoft’s increased virtualization capabilities and the related licensing changes.  The fourth posting of this series will discuss the offerings that will provide the capabilities needed to enable a cloud based VDI service and why I feel that Microsoft will change the licensing to make hosted VDI practical.