OnLive, the desktop pundits favorite DaaS provider, is one step closer to being able to offer a viable and fully compliant virtual “desktop” service following the stealth update of its platform from a Windows 7 based VDI service to a Windows Server 8 R2 Remote Desktop Services offering. While this move eliminates the threat to the service that attempting to run a set based on a licensing model that was not compliant with Microsoft’s licensing policies, OnLive is still not out of the woods.

OnLive has been generating massive publicity since it launched its low-cost Windows desktop service in January 2012, initially offering the service exclusively to iPad owners, it has since extended the service to support Android users as well. While most of the publicity was very favorable, extolling the virtues of the service, a small number of more credulous reviewers were willing to look behind the curtain and did not like what they saw. OnLive had built it service offering a standard Windows 7 desktop in a way that was simply not possible within the boundaries of Microsoft’s current licensing terms. Microsoft eventually stepped in with a blog post on the subject.

Some inquiries about these scenarios have been raised as a result of recent media coverage related to OnLive’s Desktop and Desktop Plus services. Additionally, the analyst firm Gartner raised questions regarding the compliance of these services last week. We are actively engaged with OnLive with the hope of bringing them into a properly licensed scenario, and we are committed to seeing this issue is resolved.

Joe Matz,
Corporate Vice President, Worldwide Licensing and Pricing, Microsoft

Well now OnLive has caved and reworked it service to provide a less threatening, more compliant version of the same solution based this time on Windows Server 8 R2 Remote Desktop Services. In typical OnLive fashion, it has failed to make any public announcement about this change. However, OnLive still has work to do to get itself out of Microsoft’s crosshairs.

One of OnLive desktops claims to fame is that it offers Microsoft Office bundled in with the desktop service, although perhaps not for much longer. Maintaining the appropriate licensing compliance will be a long-term battle for OnLive that will require it to constantly audit the service. In addition, the cost of licensing per device makes the delivery of free and $5 per month services a risky proposition. At $10 per month per user for the SPLA for MS Office, OnLive is loosing money every time a customer signs up. Microsoft’s licensing rules do not permit license reassignment within 90 days in the event that a customer stops using the service, meaning that OnLive will have to maintain significant additional licensing capacity to accommodate customer churn. Even if OnLive is able to secure a substantial discount for an Office SPLA subscriber license  the $10 per month service will be risky unless it can to ensure that its customers remain loyal.

I strongly suspect the days of the low-cost OnLive desktop are numbered.

The final issue that OnLive has to face is adjustment to its terms of service. The OnLive Desktop  terms of service do not do anything to inspire confidence. I’ve written about this previously, but it is worth repeating. Consider the following:

9. User Content

… We may choose to review content for to the extent necessary to determine compliance with the Guidelines,

In plain English: We can read your stuff if we want to.

… When you give others access to Your Desktop Content on the Services, you grant them free, nonexclusive permission to use, reproduce, distribute, display, transmit, and communicate to the public the content solely in connection with the Services and other products and services made available by OnLive. If you do not want others to have those rights, do not use the Services to share Your Desktop Content.

If you share your stuff via our service you wave goodbye to any licensing rights that you might reasonably wish to impose.

We may refuse to publish Your Desktop Content for any or no reason.

It isn’t clear what “publish” means here, but whatever it means OnLive’s arbitrary control of your stuff doesn’t sound good.

We are not responsible for deletion or overwriting of Your Desktop Content or other data or files, or accidental loss of Your Desktop Content or other data or files, or actions of any application that may be operating on OnLive Desktop. We strongly advise users to back up Your Desktop Content to other locations. As set forth in Sections 13 and 14 below, if your Account is closed, we may permanently delete Your Desktop Content from our servers. In addition, we have no obligation to return Your Desktop Content to you if your Account is closed as set forth in Sections 13 and 14 below, or if OnLive discontinues OnLive Desktop.

We are not liable for our mistakes and you better make sure that you back up everything you need to a separate service because if we shut the service down your data is gone.

… OnLive may, at its sole discretion, limit Internet usage, limit OnLive Desktop usage, and limit the applications that can be used with OnLive Desktop.

We are quite happy to take your money, but don’t expect any form of SLA.

Even a cursory inspection of these licensing terms show that this is no more than a cut and paste of the OnLive gaming service. A troubling revalation that makes me question the amount of thought that OnLive has put into the whole service. Regardless, until OnLive fixes its terms of service it is impossible to recommend this service.

As ever, I have shared these concerns with OnLive and offered it the opportunity to provide a statement, however no comment has been offered.

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Simon Bramfitt (127 Posts)

Simon is an independent industry analyst covering enterprise desktop, mobile and application virtualization, delivery and management technologies.

He is an experienced solutions architect with unmatched insight into the challenges of designing large (200,000 seat plus) high availability presentation and desktop virtualization systems.

Simon was invited to join the Citrix Technology Professionals (CTP) group in May 2010 and joined the Virtualization Practice in September 2010

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