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Licensing virtual machines: Industry tackles tough questions

How to license virtual machines is still a big question. Industry vendors and analysts are trying to answer it quickly to cut IT costs.

IT managers are still scratching their heads over the rules of virtualization licensing as corporations race to adopt the burgeoning technology.

At VMware's Virtual Infrastructure 3 launch, which took place early June in Cambridge, Mass., VMware CEO Diane Greene gave her take on the future of virtualization licensing. "I think we will see stakes in the ground over the next year on this issue," said Greene. "The industry is working toward a per- [virtual machine] model that is slightly different from a per-server model," she added.

"There are many licensing categories, such as licensing per processor, by named device or by user," said Alvin Park, an analyst at Gartner Inc., the Stamford, Conn.-based consulting firm. "But no one has the answer yet as to how to license virtualization."

The challenge has not gone unnoticed among vendors. Microsoft addressed the virtualization licensing question last year with the release of the enterprise version of Windows Server 2003 R2. Customers can run up to four virtual instances on one physical server at no additional cost on R2. Windows Longhorn Datacenter Edition, the forthcoming Microsoft server release expected next year, will allow customers to run an unlimited number of virtual instances on one physical server.

IBM executives recently said the company will release a usage-tracking software called IBM Tivoli Usage and Accounting Manager. The IBM product will enable software charges to be based on the amount of processing power that is used on a virtualized server.

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The software works similarly to how utility companies meter and bill for electric, gas, oil and water consumption, according to IBM. It provides a Web-based interface that meters and bills technology use. Customers can measure the use of a certain technology, such as a virtual server, by department or individual and then bill accordingly.

The IBM model differs from current licensing rules, which are not favorable in a virtualization environment, said Al Gillen, a research vice president at IDC in Framingham, Mass.

As an example, customers using virtualization products, such as VMware's ESX server, are often running several virtual copies of an operating system on their servers. In these cases, companies struggle with the question of whether they must abide by the old rule of one license per physical box – or if they need one license for each instance of the OS.

"If you want to run two instances of Windows, you need to buy licensing for two copies of the OS," he said.

The result, according to both Gillen and Park, is a massive increase in software costs for IT departments who are likely using virtualization as a cost-saving measure.

"People adopt virtualization because they see it as having a major hardware savings component,' said Park. "But they often find those savings are impacted by the increased cost of software."

The complexity is made even worse when considering the issue of licensing and dual-core and multi-core chips, said Park. These processors allow a server to run even more copies of an OS or application than a standard single-core processor.

"A lot of people implementing virtualization in the near future will be doing it on new hardware with dual-core processors," he said. "When that happens, we are really going to see software costs go up."

Park predicts the questions surrounding virtualization licensing will eventually drive the industry to adopt a software-as-a-service or utility-based pricing scheme similar to the IBM product.

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