One of the things I still get asked a lot by clients is licensing a Windows OS in a virtual / hypervisor environment. In many cases people still try to apply traditional licensing to virtual machines, which does not work. In other cases people think the licensing is different if you are using Hyper-V, vSphere, Xen, etc. It is not!!

One thing I want to make clear this article is not to say which hypervisor gives the best ROI. There is plenty of FUD by all the hypervisor vendors for that. I have worked with, architected solutions, and sold each of the major hypervisors. I have my opinions on each, but this is not the format for that.

A little background…

Early on Microsoft really did not have a strategy to licensing within a virtual environment. It was technically unsupported by Microsoft and I have a feeling they did not think it would stick around. That quickly changed with the explosion of VMware’s hypervisor (ESX at the time). I have been around IT for a long time and it was amazing how fast virtualization became entrenched in to many data centers. Within a few years it was obvious that virtualization was here to stay.

Microsoft realized that this was going to be something that has staying power after all! They built a true virtualization strategy. I say true because VirtualPC was not a strategy or a production ready architecture. Once they bought in they quickly came up with their line of hypervisor products and management. They also cam up with their licensing scheme, which at first glance was complicated.

Rules of licensing a Windows server in a Hypervisor

• It DOES NOT MATTER if you are using vSphere, Hyper-V, or any other hypervisor!!! The licensing is exactly the same!!!
• Licenses are applied at the HOST level not at the guest or virtual machine. What this means is if you are going to have 10 VMs running Windows at anytime on a host that HOST must have the appropriate licenses. The licenses DO NOT FOLLOW THE VM.
• You must license for the total amount of VMs that could ever be on that server. For instance, if you have two servers running 4 VMs each and each host is licensed for 4VM using the “Enterprise” license and one of the servers goes down, you are out of compliance if you move those 4 VMs over to the other server. The license does not move over!! They will run fine and will not cause problems, however you are out of compliance.
• Make sure you get the proper license for your environment. Microsoft has three flavors; Standard, Enterprise, and Datacenter.
  • First thing you should do is not even consider Standard in a virtualized environment. It only licenses 1 VM. If you have a hypervisor host you would have to buy 1 license for every Windows VM on that host and it could not move from that server more that once every 90 days (if you have a volume license).
  • Enterprise is good for small environments as it can have up to 4 per host. However as in my earlier example if you have two hosts running 4 Windows VMs each and one goes down, you are stuck as the license for those VMs are at the host level. As with the Standard license if you have volume licensing you can move it once every 90 days.
  • Datacenter is what Microsoft really once you to get for each host. Why else would they put such a low quantity on the Enterprise version. Datacenter allows you to have an unlimited number of Windows VMs on each licensed host. Althought the ROI changes if you have more than 8 VMs per host it is cheaper to go with Datacenter than stacking two Enterprise licenses on each host.
• OEM licenses DO NOT TRANSFER. OEM licenses are tied to the hardware. If the hardware dies the license can not be used on another physical server. There are ways to pay a little money and get around this. This also means that if you planning to perform a P2V (physical to virtual migration) and the physical server currently uses an OEM license that you will have to make sure that the host that you are migrating the server to must have enough licenses available.

As I mentioned earlier at first glance people were and are still confused. Many get upset with this method as well. However I have to say if you have a decent sized environment it is much easier and in many times more cost effective with this model.

You do not have to buy separate licenses for each Windows Server VM. You get a license key to apply to each VM. You are not paying for one license at the host and another at the VM.

If you get a Datacenter license you can load as many Windows Severs on that host as the hardware can handle. So if you have a big server with tons of resources where you can get 50-100 VMs you paid once for the Datacenter license and never had to buy anymore licenses for those VMs running on the host. Plus you do not have to worry about those VMs migrating from one host to another as long as all of the hosts in the cluster are licensed.

The gotcha on the Datacenter license is that it is licensed per socket(minimum 2 sockets) so the more processor sockets in a server the more it cost. However if you are running that big of an environment you are still coming out ahead.

It is obvious Microsoft is trying to up sell everyone to the the Datacenter license.  It can be a costly exercise for smaller companies who can not afford the cost of Datacenter, However for the enterprise it is the best route to go at this point.

An easy overview…

1. Windows is licensed at the host level not at the VM.
2. Each host must be licensed.
3. Do not use “Standard” license in virtualized environment.
4. “Enterprise” allows you to run 4 Windows VMs per host.
5. Datacenter allows for unlimited number of Windows VMs per host.
6. The rules apply to ALL hypervisors.