Generically speaking, virtual appliances consist of one or more applications, and operating systems pre-installed and preconfigured inside a virtual machine. The recently released OVF provides a standard way to package such appliances.
But Microsoft's licensing policies prevent ISVs from packaging appliances with Windows as their operating system. The company allows only certified resellers to package and distribute Windows, effectively preventing Microsoft customers and channel partners from distributing appliances based on a Windows application,, said Jeff Byrne, a senior analyst and consultant with the Hopkinton, Mass.-based Taneja Group Inc..
ISVs that participate in Microsoft's Independent Software Vendor Royalty Licensing Program can place licensed products in their application code, but a lot of users already have Windows licenses and thus end up paying double, said analyst Chris Wolf of Midvale, Utah-based Burton Group.
"Most large organizations negotiate their own volume license agreements with Microsoft and would not want to buy an OEM Windows license from a software reseller. They would effectively be paying for OS software that they already own," Wolf said.Kitchen-sink OS
In addition, Windows operating system is large in size, which is not well suited for virtual appliance packaging, according to analysts and vendors.
"Microsoft's technology is a problem because the Microsoft OS was not designed to be 'Just enough OS'; it was designed to be an 'Everything you might ever need to use' OS," said Billy Marshall, the founder of virtual appliance vendor rPath in Raleigh, N.C.
According to Marshall, virtual appliances based on rPath's JeOS implementations average between 50 MB and 100 MB. Windows Server Core, Microsoft's smallest OS installation, is about 1,500 MB (1.5 GB), or 15 times bigger, he said. "This leads to lots of wasted resources and lots of security patching and bug patching," Marshall said. "With JeOS, you have fewer things to break and fewer things to break into."
In its virtual appliances, rPath uses its own implementation of Linux – rPath Linux - and SuSE Linux Enterprise Server from Novell. As such, it can support only those applications that are written in languages supported by Linux, including Java, Ruby on Rails, Python, Perl, C, C++ and PHP. RPath cannot package .NET applications because they do not run on Linux.
"ISVs that have written their application in .NET do not have an option to run on Linux. They must wait for Microsoft to embrace this model," Marshall said.
Until then, the licensing issues surrounding Microsoft applications, along with their size and complexity, might spur the adoption of Linux applications, said Kimbro Staken the CEO of virtual appliance provider JumpBox Inc., which bases its appliance on Ubuntu.
"Until Microsoft decides to adjust their licensing to be more flexible in regard to redistribution, Windows-based applications will be at a disadvantage in the virtual appliance model," Staken said. It gives "developers increased incentive to move their applications to an open source-based stack."
Currently, the closest thing to a Microsoft-based virtual appliance are pre-configured Virtual Hard Disks, which are used to evaluate certain Microsoft products, but they aren't meant to be used in production in the way virtual appliances are.
"Windows-based virtual appliances only really work for evaluating Microsoft software," Wolf said.Change is hard
So why hasn't Microsoft adapted to the virtual appliance market yet?
"Microsoft hasn't embraced virtual appliances because it requires licensing changes, and change is difficult for a big company," said rPath's Marshall. Plus, "the very nature of on-demand usage (i.e., pay by the minute, hour, day, like cell phone minutes) with simple-to-set-up-and-run virtual appliances is challenging to measure and track," he added.
But as the OS business is transformed by virtualization and cloud computing, Microsoft's model of distributing Windows licenses via hardware providers or resellers has come under fire, Marshall said.
"The hypervisor is replacing the general-purpose OS as the layer that is distributed with the [server] hardware. [Virtual appliances] then bring their own OS with them inside of a virtual machine file to install on top of the hypervisor," Marshall said. "Generally speaking, Microsoft does not support this model due to licensing and technological constraints."
In fact, the virtual appliance issue cuts to the core of Microsoft's business model, said Taneja Group's Byrne.
"Microsoft has traditionally viewed Hyper-V virtualization as a feature of the Windows Server 2008 OS, and this OS-centric view has in turn driven packaging decisions and licensing programs," Byrne said. "From a business perspective, the Windows Server OS provides Microsoft with a large revenue stream as well as strategic control in key accounts, and so any packaging or licensing changes that might impact its business are taken very seriously."
Byrne predicts that once users start demanding Microsoft applications in virtual appliances, the company will make changes to its licensing policies. "Hopefully, Microsoft will also provide ISVs and possibly large corporate developers with the ability to further "slim down" the Windows Server OS image, so that it can be more easily packaged in a virtual appliance format," Byrne said.
But Burton Group's Wolf isn't as optimistic. "I would be surprised to see a major restructuring of their licensing policies to support OS distribution via virtual appliances anywhere in the near future," Wolf said.
"If organizations want the flexibility of virtual appliances, they're going to have to package their Windows OSes and applications as virtual appliances internally, because ISVs are not going to have this option," Wolf said.
A request to Microsoft for comments on this topic was not answered by press time.