Microsoft adds virtual core licensing to Windows Server

Yes, we're totally doing this as a favor for partners and not because we were being sued in Europe

Microsoft has announced a major overhaul to its Windows licensing regimes that make it rather easier to use its operating system in the cloud – without highlighting the reason for the change is to get the European Union off its back.

The biggest change is a virtual core licensing option for Windows Server, as opposed to paying for the OS based on the physical processor cores in host machines.

“Today, Windows Server is licensed by physical core, which means customers must have access to the physical server hardware to ensure that they have enough Windows Server licenses to cover all physical cores in the machine,” Microsoft’s chief partner officer Nicole Dezen explained in a Monday announcement.

“With the virtual core licensing option, customers can elect to license Windows Server by the number of virtual cores they are using in virtual machines, making Windows Server easier to license when virtualizing or outsourcing.”

Customers can elect to license Windows Server by the number of virtual cores they are using in virtual machines

Microsoft’s aim with this change is to get users migrating Windows Server into the cloud. But not just any cloud – the new license does not apply to Alibaba, Amazon Web Services, Google, and Microsoft. Instead the target is clouds run by Microsoft’s partner community. We're also told the new rules otherwise apply worldwide.

Windows 10 and 11 have also been given a similar update, with holders of a Microsoft 365 F3, E3, or E5 license able to run the operating systems “on their own servers or on outsourcers’ servers … regardless of whether the user’s primary device has a Qualifying Operating System (QOS) — eg, Windows 11 Pro — and without the need for any additional licenses.”

That’s a change from the current regime that requires customers who lack a primary device with a QOS to acquire an add-on license to virtualize Windows 10 or Windows 11.

Microsoft revealed the changes in an advisory for partners and Dezen’s aforementioned statement, both of which paper over the real reason for the changes.

That reason is the legal action brought by European clouds who felt that Microsoft’s software licensing programs represented unfair competition and left them at a disadvantage. The Redmond giant made concessions to end those lawsuits, with Microsoft president Brad Smith promising, “we will make it easier than ever to license Windows Server for virtual environments and the cloud by relaxing licensing rules that reflected legacy software licensing practices, where licenses are tied to physical hardware,” in a May 18 post.

Three and a bit months later, the US mega-corp is spinning the introduction of these promised licenses as generosity towards its partners, with a nod to its peace offering with European cloud providers.

Dezen’s announcement briefly references that truce, and adds her observation that “we welcome ongoing feedback from cloud providers, customers, and other stakeholders as these changes are implemented.” And Microsoft's corporate blog spins the licenses as a responsible change that helps smaller players thrive, without specifically mentioning the legal action.

Perhaps readers might care to remember this the next time Microsoft talks up its ethics?

The new licenses become available on October 1. Microsoft said training sessions for customers and partners will commence in coming weeks.

Other changes include allowing cloud solution providers (CSPs) to sell customers either one- or three-year subscriptions “for many products including Windows Server, Remote Desktop Services (RDS), and SQL Server.” More monthly billing options will also be made available for one-year offers.

Microsoft has also added a CSP "hoster” program that allows partners “to pre-build hosted desktop and server solutions that they can sell to customers along with licenses in CSP (license-included hosting), or to customers that already have licenses (customer BYOL-to-partner solutions).”

The desktop version of that program further complicates Microsoft’s virtual desktop options, which already include Windows 365 Cloud PCs, Azure Virtual Desktops, and the ability to run desktop-as-a-service wares from Citrix and VMware in Azure. Good luck figuring out how the new Windows client licenses apply across all that lot. ®

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