Microsoft makes it challenging for cloud providers to host virtual desktops

Microsoft has both licensing and multi-tenancy restrictions that make hosting virtual desktops a cumbersome and potentially costly service for cloud providers to offer. Fortunately, a couple of work-arounds that can help ease the pain.

No SPLA for VDI in the Cloud

Microsoft hosting providers typically sign up for the SPLA program (Microsoft Services Provider License Agreement), but SPLA is not available for virtual desktops. Cloud providers consequently have two choices: they can either pay the annual $100 VDA license for their customers and hold the licensing for them, or customers can transfer their VDA licenses to the designated cloud provider. VDA is not required in the event that the customer is both running Microsoft Subscription Advantage and utilizes a Windows-based machine to access the virtual desktop.

In order to get around the onerous VDA licensing requirements, cloud providers can potentially utilize Windows Server OS as the client OS. Leostream takes this approach by leveraging the Microsoft Windows Server 2008 licensing agreement with Amazon to provide customers with Windows Servers that can be utilized as desktops.

No Multi-Tenancy for VDI in the Cloud

Micrsoft licensing prohibits two customers from sharing the same server resources when accessing hosted virtual desktops; cloud providers must dedicate a server for each individual VDI customer. This policy actually represents a huge concession on the part of Microsoft who, up until a few months ago, did not even permit shared storage. Still, the loss of server multi-tenancy can disrupt the cloud providers’ hosting models.

The multitenancy restriction can be overcome by purchasing very low-end, inexpensive servers and pulling them in and out of resource pools as required – but never having more than one customer on a given server. An automated ability both to monitor server usage and move the physical hosts in and out of resource pools as appropriate makes this cloud model more tenable.

SPLA for Microsoft Office

Cloud providers can offer Microsoft Office via SPLA at a cost which is reputed to be around $10/user per month (as a comparison, Office 360 starts at around $6.33/user per month). Without SPLA, cloud providers can still offer Microsoft Office on a purchase basis: either customers transfer their licenses to the cloud provider, or the cloud provider purchases the license on behalf of the customers.

How Does OnLive Do It?

OnLive recently introduced a free Microsoft Office application for the iPad including 2GB of storage which reportedly quickly jumped to the number one ranked free iPad application. The cost goes up to $9.99 per month for 50GB storage. Given that the cost for a VDA license alone from Microsoft is $100/year, and when factoring in the multi-tenancy restrictions, I am perplexed as to how OnLive (and another provider, CloudOn, with a similar offering) can do it.

Gabe Knuth speculates on that OnLive may be using dedicated hardware. It could, for example use many individual blade servers that then host only one OnLive desktop session at a time. But even in this case, both Windows and MS Office licensing is still required. I am baffled.


See Also:

Understanding more about Desktop Virtualisation–VDI and RHSD and how to license it. 02/12/12. David Overeton.

OnLive’s train wreck: Office on the iPad. 02/07/12. Galen Gruman. InfoWorld

OnLive loose ends: Are they using VMware?  Dedicated Hardware?  Custom Licensing? Plus, are they on Microsoft’s Acquisition Radar?  02/03/12. Gabe Knuth.

Are single user Terminal Server VMs running on Windows Datacenter a loophole for VDI without SA? 11/07/11. Brian Madden.

Microsoft Virtual Desktop Licensing Guide. July 2011.

Microsoft Desktop Virtualization: Frequently Asked Questions. March 2011. Microsoft Web Site

Why Microsoft Hates VDI. 03/02/11. Brian Madden.


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8 Responses to Microsoft makes it challenging for cloud providers to host virtual desktops

  1. Vinay Mamidi says:

    Great post on the licensing aspects for hosting VDI in SP environments. Its best for SP’s to standardize on different blade models so that they can host VDI for Enterprises in 50 or 100 user increments. I have heard Desktone doing this for sub 50 user deployments, so SP VDI for SMB’s is definetly do-able. Another important aspect is that Vmware has released a new SKU around VSPP for making Desktops as a service really attractive. (

  2. Steve Kaplan says:

    Thanks Vinay for the compliment and also for the excellent information and links.

  3. Jim Curtin says:

    Great article. Very informative. Too true, as well.
    FYI – Virtual Bridges was one of the first to offer the small form factor offering (50 users) with Rackspace, Savvis and Softlayer.

  4. Danny Allan says:

    Great article Steve and one which certainly affects the Service Provider market. As Vinay points out above, Desktone does have SPs running our platform and offering as few as 20 desktops per tenant by standardizing on different blade sizes, but it doesn’t help either the end customer or the SP with pricing. Hopefully, we do see a SPLA for Windows client desktops sometime in the next little while.
    One of the key things to note in a multi-tenant platform for VDI, is that the concept of multi-tenancy applies to different areas: management, provisioning, storage, networking, directory services, and compute. Those first five concepts can all be smoothly delivered in a single platform and it is only in the last concept – compute – that virtual desktop licensing causes compliance issues.
    Of course if the SP is offering server based desktops (skinned as Windows 7) or Linux desktops, then the platform can also use multi-tenant compute and share blades in a SP environment.

  5. Steve Kaplan says:

    Excellent information Danny, thanks. Desktone was actually very helpful to me when researching this article.

  6. Errol Neal says:

    I just read the VDI and VDA 2.0 PDF and when I read restrictions with regards to separate physical hardware, my jaw dropped. This is ridiculous. Microsoft is talking out of both sides of its mouth here. How can you promote the cloud while at the same time put restrictions on providers that are not cloud friendly? “Yaay hypocrisy”..

  7. Steve Kaplan says:

    Errol, there is definitely an industry outcry from Brian Madden, Guise Bule, and others against MS VDI licensing policies and their, apparently, unique treatment of LiveCloud.

  8. even in this case, both Windows and MS Office licensing is still required. I am baffled.

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