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.