OnLive complies with Microsoft licensing, DaaS providers weigh in

OnLive Desktop is finally in compliance with Microsoft hosted desktop licensing. The move puts DaaS providers on a level playing field, but some want more from Microsoft.

One month after Microsoft called OnLive to the carpet for Windows 7 application licensing violations, OnLive has quietly moved to a new delivery model that appears to put its Desktop app in compliance.

Meanwhile, Desktop as a Service (DaaS) providers continue pressuring Microsoft to create a Service Provider Licensing Agreement (SPLA) that makes sense for cloud-hosted virtual desktops.

OnLive, Inc.'s free Desktop app posed a challenge for DaaS by offering Windows 7-based Office applications from the cloud for free, with options to upgrade. Delivering Office apps via a Windows 7 hosted client violates Microsoft's licensing rules.

DaaS providers such as Desktone, Inc. that complied with Microsoft's hosted desktop licensing requirements said their business suffered, and they could not compete with the free OnLive Desktop app.

Microsoft detailed its desktop outsourcing licensing policy in a blog post on March 8 to address questions surrounding the OnLive app. It clarified that Office apps may only be provided as a service if they are hosted on Windows Server and Remote Desktop Services (RDS), and on servers dedicated to each customer, among other stipulations.

OnLive Desktop makes the switch

As of April 10, OnLive's website offers no details about the shift from Windows 7 to Windows Server 2008 R2. The switch was first reported this weekend by members of OnLive Fans, an OnLive user website. The move puts the OnLive Desktop app for iOS and Android devices in compliance with Microsoft licensing.

The OnLive Desktop app still provides Microsoft Word, Excel and PowerPoint software to customers for free, with some paid versions. Pricing for the app, which is hosted on OnLive's cloud service, appears unchanged.

In an emailed statement, Microsoft said it is "pleased" that OnLive Desktop is hosted on Windows Server, but it will take a closer look at OnLive and ensure that it is both operating according to its license and utilizing Microsoft's price line.

More on OnLive and Microsoft licensing:

What OnLive app compliance means for Desktop as a Service providers

Cloud providers defy Microsoft licensing to compete with OnLive

Microsoft clarifies cloud-hosted desktop licensing, stings OnLive

Weighing cloud-hosted virtual desktops vs. VDI

OnLive did not respond when contacted for comment.

The cloud-hosted desktop and gaming provider may have struck a deal with Microsoft to continue offering the Desktop app without a price increase, said Gabe Knuth, a desktop industry analyst and BrianMadden.com blogger.

"Also, don't forget that this is a way for them to leverage unused hardware during off hours, so they don't need to make much money -- just enough to cover the infrastructure and operational costs during those off-peak hours," he said.

If OnLive received a deal from Microsoft for, say, $60 per RDS Client Access License (CAL), the company could break even charging $5 per month for the OnLive Plus edition, Knuth speculated.

"If they were buying Windows 7 licenses before, they were already losing a ton of money," he said. "With [RDS], they're not losing as much."

Microsoft DaaS licensing sticks

DaaS industry players such as tuCloud's CEO Guise Bule are pleased that OnLive appears to have fallen in line with Microsoft's licensing rules because it levels the playing field. Still, DaaS providers want Microsoft to update its licensing to better serve the cloud-hosted desktop era.

Furthering that agenda, tuCloud and partner Desktone recently announced plans to provide an offering similar to OnLive Desktop, called Desktops On Demand, which will soon offer "disposable," or non-persistent, Windows 7 virtual desktops from the cloud.

News of OnLive changing its delivery model to comply with Microsoft licensing has not altered the companies' plan. Delivering Office apps via Windows Server 2008 R2 is not ideal, Bule said.

"We are a desktop [virtualization] company and I do not care that a [Windows] 2008 R2 server image is almost identical to a Windows 7 image," Bule said. "If that's the case, what's the problem with letting us do desktops?

"It's bad enough that the entire terminal service business has to deliver slices of server disguised as desktops -- now we have to deploy whole server slices in order to stay compliant?" he added. "They are making an entire space deliver servers to customers instead of the desktop they think they are buying."

Desktops on Demand will provide cloud-hosted Windows 7 virtual desktops hosted on a multi-tenant cloud architecture. The Desktops on Demand app will cost $10, including support. The beta will be available in three weeks.

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

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