Cloud providers defy Microsoft licensing to compete with OnLive

OnLive's free Windows app for iPad is still available, despite Microsoft's licensing rules. Now, DaaS providers fight back.

Cloud service provider tuCloud will put Microsoft's DaaS licensing policy to the test in the next few months when it delivers a cloud-based Windows 7 desktop app to rival the OnLive Desktop app.

Service provider tuCloud and its new technology partner, Desktone Inc., said this week they plan to directly compete with OnLive Inc. by delivering full Windows 7-hosted virtual desktops that use Desktone's Desktop as a Service (DaaS) platform.

"I will build a platform just like OnLive's to challenge Microsoft," said Guise Bule, CEO of tuCloud. "If [Microsoft files] a lawsuit, fine, but OnLive is doing it and they haven't been stopped, so DaaS providers should be able to do the same."

OnLive Desktop app under fire

The OnLive Desktop app offers Windows 7 and Microsoft Office applications, including Microsoft Word, Excel and PowerPoint software, to iPad and Android tablet users. The app, available in free and paid versions, is hosted in the cloud. Industry experts say this violates Microsoft's Service Provider License Agreement (SPLA).

In response, Microsoft reiterated its licensing rules in a blog post last week and called attention to OnLive's possible licensing violations. The company said it would work with OnLive to resolve any licensing issues. The OnLive app was still available on iTunes as of March 14.

Meanwhile, DaaS providers that have followed Microsoft's rules say it has hurt their business for long enough. Since Microsoft has not prevented OnLive from delivering a Windows/Office app from the cloud, DaaS providers are about to follow suit.

Virtual desktop hosting providers are justifiably disturbed by Microsoft's apparent willingness to tolerate OnLive's licensing violations, said Paul DeGroot, principal analyst for Pica Communications, a Microsoft licensing consultancy based in Washington.

"I'm not surprised tuCloud is making a statement this way, and it's an important statement for them to make," DeGroot said.

"Cloud hosting providers have customers asking for this same capability, but their service provider agreement prohibits that," he added. "Now we have an organization that's doing just that... This is hurting business for people who do pay Microsoft. They feel like a chump."

The tuCloud offering, called Desktops On Demand, will deliver Windows 7 virtual desktops to consumers and businesses from the cloud, to any device with an Internet connection. It will be based on Nexenta Systems Inc. storage, Desktone and Citrix HDX, Bule said.

The $10 hosted virtual desktop app will be available through DesktopsonDemand.com in the U.S. in Q2, followed by a European Union rollout in Q3/Q4. The price will also include tech support.

Meanwhile, why Microsoft has not stopped the OnLive app yet remains a mystery.

"But one thing is for sure: They won't continue to let companies give Windows and Office away for free," DeGroot said.

Microsoft has been known to stop providers that violate licensing rules. In 2010, for instance, Microsoft stopped Seattle-based Spoon from streaming Internet Explorer because the offering violated licensing policies.

Microsoft declined to comment on tuCloud's plans or on any updates regarding OnLive.

Microsoft's DaaS licensing rules

Microsoft's licensing rules require that a hosting provider dedicate hardware to each customer, and that hardware may not be shared by or with any other customers of that partner.

In addition, Microsoft does not provide an SPLA for DaaS providers. Instead, DaaS customers have to provide the partner licenses through their own agreements with Microsoft.

DaaS providers hope that Microsoft eventually creates an SPLA specifically for cloud providers.

Its licensing policy also states that the SPLA does not support delivery of Windows 7 as a hosted client or provide the ability to access Office as a service through Windows 7. Office may only be provided as a service if it is hosted on Windows Server and Remote Desktop Services.

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Let us know what you think about the story; email Bridget Botelho or follow @BridgetBotelho on Twitter.

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