VMware dodged a bullet this week, though its escape has more to do with Microsoft's reluctance to give up a dollar of revenue even to make life easier for its customers than to anything VMware has done to secure its own position. Microsoft, which is a giant in the market for business applications as well as in operating systems and the hypervisors that virtualize them, had the opportunity to coordinate license changes for its software to make the construction and management of virtualized data centers a lot easier. Today Microsoft announced it has recast the license requirements for 41 server-based applications so the applications can be moved from one virtual server to another within a server farm without any additional license fees. The central change: the elimination of a 90-day delay on server application licenses. Previously, users could move an application from one virtual server to another, but first they had to license both the old server and the new one, according to Zane Adam, senior director of integrated virtualization in the Server and Tools business at Microsoft.Applications had to be licensed to the particular server on which they ran, Adam says. The requirement was a holdover from the days before virtualization, when an application had to be licensed to a specific piece of hardware and could only be moved after 90 days. That, presumably, was to keep customers from licensing SQL Server on a four-year-old, one-processor Dell, then shifting it to a 16-processer, 64-core IBM superserver an hour later. Freeing up an application, especially one like SQL Server, is a real benefit for end-user companies, according to Chris Wolf, analyst with the Burton Group. Many ISVs embed in their own custom-designed applications, for example, so customers wanting to migrate a custom app around a server farm can get hung up on the license for an application they didn't necessarily want, anyway. License terms that punish customers for moving an application from one VM to another are counterproductive for both vendors and customers, Wolf says. Virtualization is common enough now that licensing terms favoring virtualization are an absolute requirement for many customers. Microsoft's new license terms also cover products from any virtualization vendor that has gone through Microsoft's Server Virtualization Validation Program (SVVP), which certifies virtualization solutions for Windows Server 2008 and other Microsoft products. On Aug. 18, VMware signed an agreement to put its products through SVVP, according to a Microsoft spokesperson. That seems to be that both VMware and Microsoft are cutting things a bit close, considering Microsoft announced the license changes one day later, but what's life without a little brinksmanship? Cisco, Citrix, Novell, Sun and Virtual Iron signed on to the SVVP long before, by the way; so Microsoft's license changes cover all the major hypervisor suppliers. Unfortunately, they only cover half the Microsoft portion of any virtual machine, Wolf says. Except for customers who buy Data Center or Enterprise licenses that allow unlimited instances of the OS and applications for a single price, customers have to pay additional license fees for every VM, and those OS instances are limited to the servers on which they're registered. "A lot of customers would have to double their licensing costs to virtualize their servers, or would have to upgrade to [Windows Server] 2008 Data Center," Wolf says. "If you have a standard edition of a license, you can only assign it to one server. Why not just assign that license to a VM and let the OS move along with the virtual server and the application rather than tying it down to one box?" Customers with unlimited licenses don't have to worry about the incremental cost of licensing, Wolf says. But smaller and mid-sized companies, which can't afford unlimited licenses and who represent the largest number of customers most likely to be interested in Microsoft virtualization rather than the more-expensive VMware, do have to worry about it. "We dont want people to drive their dynamic IT projects based on licensing decisions," Microsoft's Adam says. "We want them to be able to focus on the real work, the hard work they have to get done. If you have a group of servers and you want to move one instance of Sharepoint or Exchange around the server farm, as long as you have one license for that, you should be free to move it."Free is good, of course, even when it means "slightly less restricted" rather than "unrestricted and at no additional cost."It would be nice, Wolf says, if Microsoft would make license changes in large, comprehensive steps, rather than in like this, on incremental, revenue-protecting tip-toes. Microsoft already has a major price advantage over VMware, so it may not feel much pressure to make things even easier or potentially any cheaper for customers. But that reluctance will continue to cost customers money they shouldn't have to spend. It will annoy customers it would be better not to annoy. And it will reduce the impact of a licensing shift from grand-slam to a solid double. Customers will benefit a little. Microsoft probably will, too. Microsoft customers will not find themselves suddenly set free to create a dynamic IT infrastructure they can reconfigure freely according to their own needs, rather than Microsoft's however. \nThey won't thank Microsoft for that, but VMware just might.