Microsoft's virtual desktop licensing costs still hinder VDI adoption

By making virtual desktop licensing expensive, Microsoft prevents customers from lowering desktop management and Windows upgrade costs while protecting its Windows profitability.

If Microsoft's lukewarm comments about VDI or its repeated "concerns" about the cost of desktop virtualization haven't told you anything about the company's stance, a look at Microsoft's licensing rules should help you nail it down.

Microsoft really doesn't like desktop virtualization. The reason? Because customers might get the idea that virtual desktop infrastructure (VDI) can solve two problems, both related to the vendor's most profitable product line, at once:

  • The high cost of managing desktop computers
  • The high cost of upgrading computer hardware and software

With VDI, customers can create centrally managed, locked-down desktops that do exactly what customers need, and only that. With that, client-side hardware and software -- notably, Windows -- become relatively unimportant.

Microsoft's solution to this problem is to make Windows desktop virtualization licensing so costly that VDI offers no savings compared with running everything on physical desktops.

Pay or Suffer
Let's take the most expensive way you can virtualize Windows desktops. You go to your local department store and clean the shelves of the last 10 retail copies of Windows 7. These aren't $200 upgrades but $300 full versions of the software. You load them into virtual machines on a server. Surely, spending $3,000 for licenses you're only going to run in 10 virtual machines will keep the bean counters in Redmond happy.

Nope. The rules say you can't run more than one instance of the retail product on each device.

You could run them on blade PCs, but even after you pay the $2,000-plus price tag for blade hardware, you might run into problems accessing your virtual machines (VMs). Microsoft won't let you access Windows VMs remotely unless the device you're using has the same edition of the operating system on it as the OS in the virtual machine. That shuts the door on using VMs to avoid having to replace user hardware and software.

Eventually, you will find your way back to Software Assurance (SA), Microsoft's handy add-on to licenses that the company has deemed the only way to virtualize the Microsoft stack.

Adding SA to OS licenses enables most common virtualization scenarios, but it is an annual subscription through which customers pay the full cost of the OS every three years, so it isn't exactly cheap.

And if you didn't buy SA right off the bat, it's even more costly, because you can't just add SA to older computers. SA must be purchased at the same time as the original license. Even with a 90-day grace period after the purchase of a new computer, that horse left the barn years ago on the old XP machine you were hoping to use as a thin terminal for accessing virtual machines.

To restore that right, you'll have to buy a new OS license for the old computers for $187 (less in larger volumes). Within 90 days, add two years of SA for another $108. That gets you back to nearly $300, about the same price as those gold-plated full retail copies you purchased at the start. And at $54 a year for as long as you want to keep SA and its virtualization privileges, it will be even costlier over the long run.

Microsoft's Problem
Ironically, the high cost of VDI that Microsoft executives lament is mainly the result of their company's own licensing requirements.

As of today, Remote Desktop Services (RDS) is the most mature and least expensive option, but not all applications work well on RDS. Microsoft did offer a generous concession in the form of the free XP Mode feature of Windows 7. But Microsoft has not provided cost-effective licensing for customers that want to run centrally managed desktops on servers compared with what they pay for Windows on a new OEM machine.

Microsoft may believe that its dog-in-the-manger approach will keep competitors from eating its lunch, but with almost no offering that costs less than $100 per year, the company is pushing customers into the arms of competitors. Meanwhile, Microsoft is ignoring what could be a highly profitable product.

As many customers learned during recent migrations from Internet Explorer 6 to later versions and from Windows XP to Windows 7, building applications that rely on a specific Microsoft OS or browser is fraught with risk. Even when customers want to use virtualization technologies (such as Microsoft App-V) to assist their OS migration, Microsoft rules them out of line. In fact, Microsoft dislikes application virtualization so much, the company prefers to stall Windows 7 migrations rather than support IE virtualization.

At the end of the day, customers will look elsewhere for a desktop application platform. Customers will put more emphasis on generic browser-based interfaces such as HTML 5, an open standard not controlled by any vendor and free of Microsoft licensing entanglements. This trend has built up considerable steam in consumer computing over the past decade, and browser-based applications have gained popularity among business customers as well. In fact, for many users, the browser is now the desktop.

Customers may even avoid depending on Microsoft's browser, given the IE6 hassles and the lack of XP support in IE9. A future in which a free, non-Microsoft browser is more important to customers than the OS on their hardware is one that the company's virtualization licensing will only hasten. And it is not a future in which Microsoft will flourish.

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

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