In our news analysis section, we detail sparring by VMWare and Microsoft over the future of virtualization.

Software licensing is going to have to change in the age of virtualization. Who's got it right, Microsoft or its upstart rivals?

Our tech editors analyze the situation with some surprising results. Read on...

There's a lot at stake here. I know we've said this before, but there's a battle going on for who owns the OS closest to the bare metal--the evolution of the hypervisor, if you will. Case in point: as an IT purchaser I'm about to push through a PO for few hundred thousand in new equipment. Three years ago those servers would have all been bought with either RedHat, Novell, or Windows 200x licenses on/with them. Today? All of them will be purchased with VMware Vi3(ESX) licenses. Sure, they will eventually run one of those OSs in a virtual machine (VM) ... but the software license bought with the hardware now comes from VMware.

That's a shift.

VMware is starting to get more flexible in its prices; ESX was a straight $5k per license a few years back (MSRP), and now [VMware has] a range from $1k-$5750. That's good for us IT consumers, and I think it's due in part to current and pending competition (mention Xen in the same meeting with a VMware salesperson and see what happens!).

My take away: consumers will (do?) have virtualization options.

If you assume that to be true, then the next question is: Do these virtualization players need to play together? What kind of cross-vendor functionality am I to expect from my virtualization suppliers? Enterprise IT will say yes, but then we're right on path to the whole standards vs. "value-adding" discussion. (Embrace and extend, anyone?)

And what about this whole Vista's licensing thing where you can't legally run it in a Virtual Machine? The reason behind that is ... what, exactly, Mr. Microsoft?

Then there's the logical sparring: If you figure Xen, Novell, and Microsoft are in one corner (logical, given the recent announcements) who should logically be in the other corner? VMware and ... RedHat?

So I buy VMware with my Dell/HP/IBM/etc. servers now--what OS I run in the VM is an afterthought. So do standards, licensing, and which OS ships with my hardware matter? Yeah, I think they do. - Greg Shipley, NWC Contributing Editor

Besides the obvious load balancing of similar (Citrix, Web, etc. servers) across multiple hosts there are many applications that have seasonal (weekly, monthly etc.) busy periods that can be stacked 8 deep on a physical machine outside the busy period. One client of mine has a data warehouse that gets shifted to its own DL585 for the weekly data load and cube build and shifted back to share a server.

The building of virtual machine images that won't run under VMware and preventing the modification of MS format VM images to VMware format are just petty little games that annoy the customers and demonstrate that MS sometimes takes the competition too far letting things that won't really slow VMware down annoy customers. - Howard Marks, NWC Contributing Editor

Perhaps this is just the opening salvo of what’s going to turn into a battle royale between VM, OS and application vendors over licensing rights. The increasing use of VM’s – and even multi-core processors – are straining licensing designed for the antiquated one machine, one OS, one application model, and the industry as a whole hasn’t made much progress in addressing these problems even though everyone knows they exist. Is VMware correct in saying that Microsoft is being heavy-handed in their handling of the use and licensing of their newest products? Sure – so what else is new? This strategy has served them well in the past, given the fact that they own both the OS and the key desktop applications that run on them. Is it legal? Apparently the government has found it so. Is it unreasonable? Hmmm…

Though the bigger issue is still the licensing of applications and OS’s across virtualization vendors, the big flap here is about the limitations that Microsoft has imposed on the use of the first generation of pre-configured, Virtual Hard Disk (VHD) images of their Windows Server 2003, Exchange Server 2007 and SQL Server 2005 products released as a “test-drive” download. These free, evaluation VHD’s were released to allow companies to test them in context of a Windows Virtual Server 2003 R2 environment. Of course this is a move to get companies to take a closer look at Microsoft’s virtualization capabilities – but is it wrong that they’ve limited the use of these evaluation VHD’s to Virtual Server? Perhaps not.

As of today, VMware is pretty much dominating the virtualization market so it’s understandable that they would be concerned about the restrictions Microsoft has placed on these evaluation images. And from a customer’s point of view it would certainly be better to be able to compare these applications using both VMware and Microsoft VMs, or even with Xen for that matter. But on the other hand, is it really fair to expect Microsoft to certify these images for use under other vendors VM environments? Not really. I’ve looked around and I don’t see an evaluation version of VMware’s VMotion product available for testing on other virtualization platforms either. As both an OS and key application vendor Microsoft will always be caught between a rock and a hard place when it comes to such claims about unfair advantage, but this is a matter for the marketplace – and perhaps the courts – to decide. Business is business, and honestly, how much time of your day do you spend making life better for your competition? - Steven Hill, NWC Technology Editor