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Mastering the dark art of Windows virtual desktop licensing

Finding a reasonably priced way to license Windows virtual desktops can be difficult. Here are some tips on how to go about licensing without overspending.

Virtual desktop infrastructure isn't just for enterprises -- companies of all sizes can virtualize Windows desktops without breaking the bank by using products with low infrastructure requirements. But the question is how to license Windows virtual desktops in a way that is cost-effective.

Microsoft offers a few different options for licensing Windows in virtual desktop environments, but let's start with a way to avoid licensing costs altogether.

Licensing Windows virtual desktops -- for free
Windows 7 Professional or Ultimate include a free license for XP Mode, which lets IT run a Windows XP virtual machine atop of Windows 7. Organizations need Microsoft's Virtual PC and a special copy of Windows XP -- both of which can be downloaded from Microsoft.

Windows 7 Professional or Ultimate with XP Mode costs $100 to $150 more than Windows Home Premium -- an operating system that may work for very small organizations using Small Business Server.

While XP Mode is great for running legacy XP applications on Windows 7 machines, you can't run Windows 7 in XP Mode, because that would violate Microsoft's rule that only one copy of Windows 7 can run per PC (unless your company has Microsoft Software Assurance). So, even if you fork out big bucks for a retail copy of the second OS, you can't legally run Windows 7 in a virtual machine atop the installed version of Windows 7.

However, there is a way to legally run Windows 7 in a virtual machine at no extra cost. This bleeding-edge approach involves running something other than Windows as the operating system on the PC, and then running Windows 7 in a virtual machine on top of it.

Organizations that want to try this are probably best off getting the OEM or a system builder to build a custom image. For example, Linux running on the physical machine, OEM Windows in a virtual machine, with a backup of the Windows-based virtual machine also stored on the computer's hard drive.

In this case, users will boot into Linux and then fire up a virtual machine running Windows 7. This solution isn't pretty, and its main value may be in demonstrating how difficult it is to adapt Microsoft licensing to simple virtual scenarios. However, it still offers some significant virtualization benefits, such as a backup operating environment, at no extra cost.

That approach may pay for itself, at least partly, if a business can use Windows 7 Home Premium rather than Windows 7 Professional in the virtual machine.

Paid virtual machine licensing
Paying Microsoft for desktop virtualization rights is the path of least resistance for shops planning to use desktop virtualization software, and it may even be the most cost-effective when the costs of workarounds are taken into account.

Investing in a Software Assurance (SA) subscription for new or replacement PCs is often the simplest and most economical approach to licensing in virtualization environments, particularly for IT shops that just want to dip their toes into desktop virtualization or may only want virtualization rights for a small portion of users.

Microsoft gives customers 90 days from the time of the computer purchase to add SA to the operating system. It is a subscription program available through volume licensing, and the virtualization rights it offers last only as long as the subscription is current, usually for the term of an agreement. With SA in place, you gain many virtualization use rights, including the ability to run up to four Windows virtual machines at a time and to store any number of virtual machines on the local PC or on a server (although only PCs with Software Assurance can access those virtual machines). All of the OS instances required for those virtual machines are licensed by the SA applied to the desktop's Windows OS.

Another good choice is Microsoft's Virtual Desktop Access (VDA) license. At about $100 per device, per year, VDA isn’t cheap, but it gives customers more flexibility than any other option. It affords customers at least one virtual machine on any device (and multiple virtual machines on a Windows 7 Professional computer), access to virtual machines from a third-party device while roaming, running a virtual machine on a USB flash drive and more. VDA Windows licenses can also be transferred from one machine to another -- a relatively rare right in the Microsoft universe.

Session virtualization (otherwise known as Terminal Services or Remote Desktop Services (RDS)) gives users access over the network to a Windows Server desktop hosted by a Windows server, which is just fine for most desktop applications. This requires a copy of Windows Server configured to run RDS, and each user that accesses the services needs an RDS Client Access License. (This requires a continuous network connection to function.)One exception to the volume licensing requirement is when Windows MultiPoint Server 2011 is purchased from an OEM as a package of hardware and Microsoft licenses. Such packages can cost little more than the licenses alone through a volume program and can require less skill and time to get running.

Microsoft's MultiPoint Server 2011 is ideal for organizations with fewer than 20 desktops. It was originally limited to educational environments, but it's now available to commercial customers through all volume licensing programs. It can be a cost-effective solution for small businesses that want to minimize the risk of malware and the management costs associated with regular desktops, although relying on a single Windows server for all desktop computing can be risky.

For many applications, desktop OS virtualization and session virtualization (which uses the Server OS to run desktop applications) are equally useful. Virtual machines running on desktops can be customized for each user to a greater extent and will work offline, but they don't offer the centralized application management that RDS does.

Microsoft volume licensing options
Microsoft's simplest volume licensing program is the Open License, which requires the purchase of five licenses to start -- after which, licenses can be purchased one at a time. An Open License authorization lasts for two years, and Software Assurance for that time costs about $109 per device.

Purchasing SA through Open License is problematic because it needs to be paid for two full years whenever it is purchased -- even if there's only one month left in the authorization, and therefore in Software Assurance rights. An organization more than a few months into an authorization should try to come up with another five-license purchase to start a new authorization to get the full two years out of its next purchase.A better program for small to midmarket customers interested in adding Software Assurance to some or all of their licenses is Open Value, which automatically adds (for a fee) SA to every license purchased through the program. Like Open License, it requires only five licenses to start.

Open Value is a very good choice for midmarket companies with more than 250 computers, since they're eligible for Open Value's "C" discount, which offers prices comparable to the more complex Enterprise Agreement used by large organizations.

Open Value is a three-year agreement, and partially prorates SA purchases, so purchasing SA partway through an Open Value agreement imposes less of a penalty than it does in Open.

One of the many variations of Open Value, the Open Value Subscription, is particularly attractive to small organizations that want to both upgrade all of their PCs to Windows 7 and take advantage of Software Assurance virtualization rights. This costs only $63 per PC, per year, in quantities as low as five computers. Note that the Windows upgrade is not permanent (the agreement may need to be renewed to maintain the operating system right), but the price is barely more than SA alone and is the only way to upgrade older computers through Software Assurance without purchasing new licenses.

Two other volume licensing programs -- Select and its successor Select Plus -- are not good options for midmarket customers looking at desktop virtualization. Select is the preferred way for midmarket and larger customers to purchase server software, but Select discounts on desktop software are poor. Most midmarket customers will qualify for only the minimal Select A discount, which is little better than Open or Open Value pricing, and not as good as Open Value's C discount.

Paul DeGroot is Principal Consultant at Pica Communications, an independent firm focused on optimizing Microsoft customers' license spending and agreements.

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Instead of installing Linux and then trying to put Windows 7 on top of that, you could also use a desktop hypervisor like Virtual Computer's NxTop Engine. NxTop Enterprise includes both a management system for managing virtual desktops as well as a client-hypervisor, but the client-hypervisor itself, NxTop Engine is available for free.