The DaaS (Desktop as a Service) market is maturing, and more great products are being released every day to facilitate DaaS functionality. But just like the foundation of a house affects what you can build on it, Microsoft’s unwillingness to offer VDI licensing for the desktop operating system still presents a major challenge to the stability and growth of this market.

Cloud providers circumvent the lack of Microsoft desktop operating system or VDI licensing in one of two ways:

  1. Allocate server licensing, which requires a 1:1 ratio based on user to virtual machine. In essence, this implies that the user actually accesses an instance of Windows Server which has been refaced to look like Windows 7 or 8.x.
  2. Designate Windows 7 or 8.x operating system licensing based on desktop operating system licenses provided by the end customer, such that the cloud provider platform is an extension of the customer’s environment. Without getting into details, this type of licensing has quite a few stipulations for compliance and is complex.

The new Amazon Web Services WorkSpaces offering became available last week, and it is based on the Windows Server licensing described above. Looking at it from AWS’s perspective, it would have been much easier (and significantly less expensive) for the offering to incorporate desktop OS or VDI licensing if at all possible. Apparently, the AWS lawyers couldn’t find a better alternative for licensing WorkSpaces by means of a desktop operating system either.

From a Microsoft perspective, forcing cloud providers to license VDI based on a server operating system yields them tremendously more revenue as compared with a desktop operating system. When comparing retail pricing of operating systems, Windows Server costs about four to five times more than Windows 7 or Windows 8.x desktop operating system. Financially, Microsoft does not have an incentive to relinquish the server operating system revenue from cloud providers as part of the Microsoft Service Provider License Agreement (SPLA).

This appears to be a classic instance of shortsightedness on Microsoft’s part. While Microsoft can be credited with providing numerous technological benefits for many millions of consumers, this archaic viewpoint has had a negative impact on the cloud marketplace. It hasn’t crippled growth and innovation in the DaaS marketplace, but it has added some complexity and cost in order to comply with Microsoft’s licensing requirements.

At the same time, Microsoft no doubt realizes that they have the cloud providers backed into a corner. They must use a Microsoft operating system for DaaS, and providers know that they must comply with Microsoft licensing. So, DaaS providers pay for server licensing month after month as part of their SPLA contracts.

For about a year now, there have been rumors that Microsoft’s Project Mohoro will represent Microsoft’s entrance into the virtual desktop marketplace, but information regarding this effort is scare. If Mohoro comes to life based on true desktop OS–based VDI and not server OS–based VDI, the cloud marketplace will cry foul in a huge way.

Traditionally, Microsoft announces licensing changes on or before July 1 of each year, which coincides with their fiscal year. Will this be the year that true desktop VDI licensing will finally come to fruition?

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Jo Harder (25 Posts)

Jo Harder has been involved with virtualization for over 15 years, long before virtualization was the norm. After holding several sales and marketing positions, she started down the path of bits and bytes while at AT&T/Lucent Technologies. She then moved onto Citrix in 1999, where she became a Senior Architect. Her 11-year tenure included a combination of Citrix Consulting and Technical Readiness roles. After leaving Citrix, Jo provided consulting services for various clients for the next year. In her current role at a hosting provider, she is focused on cloud-based solutions for financial industry clients.

Jo's diverse background of sales, marketing, management, and architectural/technical expertise brings a unique perspective to Virtualization Practice. She welcomes input from vendors, industry contacts, and end users and can be reached at joharder@virtualizationpractice.com.

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2 comments for “Cloud + DaaS Licensing May Be Better in 2014?

  1. Raj Dhingra
    April 8, 2014 at 2:15 PM

    Jo

    Good article. The issue has been prevalent for a very, very long time.

    Option 2 – where a customer has to provide licenses to the MSP/SP is fraught with friction – which has contributed to the slower adoption of DaaS to date.

    It’s possible (and likely) that MSFT will introduce a cloud-based app/desktop offering in 2014. However, if they use a desktop-OS based offer, they will need to allow ALL industry players to use that same licensing/pricing offer. They cannot just use it for themselves ( for anti-trust reasons).

    This would certainly be great for the industry.

  2. April 14, 2014 at 2:30 PM

    I agree it would be great for the overall industry. However, I don’t know if Microsoft has enough incentive to do so. Between the client licenses and the Server OS license, Microsoft has pretty good incentive to keep things as they are today. Maybe with the new leadership things will change as Microsoft shifts focus away from packaged software in general. Satya Nadella’s willingness to give up Windows 8.1 revenue on screens 9″ and smaller may be an indication things are headed in the right direction for DaaS this year.

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