Microsoft needs to clean up its licensing act

Penned before days of desktop virtualization, Microsoft's archaic licensing terms are stifling innovation by DaaS providers

Yesterday I wrote about Microsoft's apparent secret deal with OnLive that allowed OnLive to give away free access from an iPad to the Windows 7 desktop and three Office 2010 programs. Shortly after the article appeared, Microsoft corporate vice president Joe Matz finally posted a public acknowledgement of the problem:

Recently we have been asked whether and how Microsoft partners and outsourcers can use Windows 7 Clients on hosted server platforms to deliver desktops as a service while remaining consistent with their licenses. ... Some inquiries about these scenarios have been raised as a result of recent media coverage related to OnLive's Desktop and Desktop Plus services.

It's hard to believe Matz only heard about it "recently." The desktop-as-a-service industry has been screaming about it for two months, ever since OnLive announced the free service at the Consumer Electronics Show on Jan. 10. OnLive has been giving away something that costs other DaaS providers a pretty penny.

Danny Allen, CTO of Desktone, put it to me this way, "Microsoft is stifling innovation here because companies want to leverage desktop virtualization (VDI) for many reasons (mobile devices, Windows upgrades, contract worker, etc.). It may not seem like a big deal that Microsoft is stifling service providers who want to deliver DaaS because companies can just build their own VDI deployment. However, many customers can't justify doing this because the upfront cost to build a data center is too high and the environment is very complex to build and manage. Because of this, companies look to the cloud for this technology -- this is where the licensing causes problems."

You can see the details for yourself in Microsoft Volume Licensing Product Use Rights document. It runs 150 pages of dense legalese.

What's wrong here is actually pretty simple. Microsoft has never set virtual access license terms for a client operating system. Now the company needs it. Ten years ago there wasn't much demand for access to a rented virtual desktop. The world's changed. Microsoft hasn't.

Microsoft's obtuse licensing won't permit direct access to Office from Windows 7. DaaS providers who play by the Services Provider License Agreement rules have to jury-rig Remote Desktop Services access to the the Windows Server 2008 desktops. Microsoft doesn't offer SPLA for Windows 7

Desktone and Nivio are two DaaS companies that offer access to the Windows desktop and Office 2010 programs -- but they do it in a convoluted way that qualifies for greatly reduced pricing by Microsoft. They've both come up with customized versions of Windows Server 2008 R2 that look and act a lot like Windows 7 but qualify for Microsoft's Service Provider License Agreement. Without an SPLA, a DaaS company has to make sure that their customers have a Windows 7 license for every user, on every device that they use to connect to the service.

Add to that some truly bizarre hardware restrictions -- DaaS companies aren't allowed to let customers from two different companies share the same servers or storage -- and the price of doing business legally shoots through the roof.

It'll be interesting to see if Microsoft and OnLive come to an agreement. In the interim, DaaS providers, struggling with archaic and Byzantine licensing terms, are getting the shaft.

This story, "Microsoft needs to clean up its licensing act," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.