Microsoft Server Licensing Implications with VMotion

One of my friends recently emailed me to clarify a point on potential implication of Microsoft Server Licensing on VMware, in perticular with regards to VMotioning (moving running VM's amongst different physical "ESX" servers).  He was notified by their software partner during a recent audit that either they need to starting buying windows data centre licenses to cover all the ESX server CPUs in order to continue free DRS initiated (or Otherwise) VMotion, or turn off VMotion alltogether.

So I thought I'd share my reply to him with all of you as this seems to be an area that is still either not very clear amongst lot of folks OR often, people simply choose to ignore alltogether (arguably, due understandable reasons). I've obviously modified some lines to remove the identity of my friend...etc but the message remains intact....!!

NB: Please note that this info only applies to server virtualisation and NOT VDI

Windows Licensing & VMware

Unfortunately, the common assessment that Windows Datacentre license is the most practical method to license your VMs within an ESX cluster is the correct one if you want the VMs to freely move in between physical ESX hosts via VMotion as a part of DRS initiated VMotion or otherwise (i.e. Administrative VMotion for maintenance tasks).

In order to understand why, you first need to understand the MS server licensing limitations. Usually, all windows server licenses are tied to the underlying physical hardware. This is still same even if that server is a VM, in which case the VM's OS license is tied to the ESX servers hardware, usually the ESX server where the VM ware created & build with that Windows Server OS. So, when you look at VMotioning that VM off of that ESX server to another, the following limitations apply.

  • If its an OEM Windows Server license, the OS license is tied to the original ESX server hardware (regardless of whether its STD, Ent or DC license) and is never moveble to another hardware through VMotion or any other method. So No VMotioning allowed there.

  • If its bought though a Volume Licensing program, (Regardless of the license type - STD, ENT and DC), it can be reassigned to another physical hardware (i.e. the VM can be VMotioned from  one ESX host to another) ONLY every 90 days through VMotion or other methods. It however permits you move it from one ESX server to nother in the event of a hardware failure without being subjected to this 90 day rule. (So HA initiated VM restart on another server due to hardware failures are permitted)
So, for all the Windows server licenses bought through the volume licensing program, if those VMs need to be freely moveble within an ESX farm (Such as DRS initiated VMotion), each ESX host (physical hardware) need to be licensed for the worst case scenario (aka: Peak usage where all VMs may end up running in 1 ESX server hardware for example) unless you can ensure this will never happen. Whether each ESX host is licensed to run these VMs is entirely dependent upon the type of windows server licensing you have assigned to each VM. Given below is a description (I will use windows 2008 licensing below, but it can be run in downgraded mode to run Windows 2003/2000 if need be),
With windows 2008 STD
It only allows to run 1 instance of that VM on a specific set of underlying hardware. i.e. If the VM was licensed on ESX01, it is only licensed to run on that server's hardware. If the VM is to run on ESX02 after being VMotioned, you need to have another Widows server 2008 STD license to cover that.
So if the VM to freely move amongst 5 ESX servers, you need 5 x Windows server STD licenses just to cover that VM alone.

With Windows 2008 ENTERPRISE
It allows to run 4 instance of that VM on a specific set of hardware. i.e. A single Windows 2008 Ent license would allow up to 4 windows 2008 Ent VMs (or the editions below ENT) to run within a specific ESX server. (That is, if 4 VMs were created on the ESX01, you can run all of them with just 1 Enterprise license as long as they reside only on ESX01). If the VMs were to move to ESX02, you need another Enterprise license to cover that.
So, if we have 5 ESX servers and 8 VMs (Ent or STD), the number of Enterprise lisences we need to cover the 8 VMs to freely VMotion would be 10 (2 Ent licenses per server to cover a peak scenario where all 8 could be running on the same ESX host).

With Windows 2008 Data Center
There are no limits to the number of VMs that can be run on an ESX server with the Data Centre license. If however those VMs need to move to another ESX server, that ESX server also need a Data Center license.  Under the DC license, you can also run Windows server STD and ENT due to downgrade rights. This therefore is more cost benefitial within an average ESX cluster.
Lets look at a scenario where we have 32 VMs running amongst 4 ESX servers where each ESX server has 4 CPUs
License Costs (As per the MS online quotes in British Pounds as of today. ofcourse you will not pay these prices due to volume licensing discounts since they are all proportionate, the saving % would be around the same) -  STD Licensing cost = £600.00, ENT license cost = £1,900.00, DC license cost (per CPU) = £2,000.00

  • Total costs under Widows Standard licensing       = 600 x 32 x 4  = £76,800.00

  • Total costs under Widows Enterprise licensing     = 1900 x 8 x 4  = £60,800.00

  • Total costs under Widows Data Centre licensing  = 2000 x 4  x 4 = £32,000.00

Clearly the Windows Data Center license turns out to be the cheapest in comparison.

I personally am not a big fan of the MS server licensing mechanism where its always tied to the underlying physical hardware, especially in this (virtual) day and age but hey, its their product and they call the shots. (in fact these terms are the same for even Hyper V users when it comes to live migrating the VMs). However even the cheapest option above is still quite expensive for lot of customers (especially SMEs) and I have seen many people ignoring this licensing cost when planning the budget for their VMware infrastructure.
If you are willing to share, let me know what you've done with your VMware solutions?? Have you taken this cost in to account within your budget??
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4 Replies

Note that if you have Software Assurance on an OEM Server OS, it can be transferred to another device. It is not permanently locked to the device it is installed on. That is true of the desktop OS, but not of the Server OS.

Many people have existing Windows Server licenses that they are not willing to throw out in order to purchase Datacenter. You can add Datacenter licenses to increase the opportunities to use VMotion without throwing everything else out.

For example, let's say that you use Vmotion for load balancing. Let's assume that you have consolidated eight copies of Windows Server Standard on Server A. You have assigned eight Windows Server Standard licenses to that physical server. You also have Server B, a two-proc server licensed for Windows Server Datacenter, with two per-proc licenses. Server B is running four VMs, which also use running Windows Server Standard as the guest OS. At any time, you can move any or all of the VMs on Server A to Server B and back again. You do not need to wait for 90 days. The reason is that at any given time, a VM was covered by either one of the eight Windows Server Standard licenses or by the Server DC licenses. No licenses have been transferred, so the 90-day limit never kicks in.

Note that you could not move a VM on Server B to Server A unless a) the VM is using Windows Server Standard, and b) the total number of VMs running on server A never exceeds eight.

I would recommend Windows DC to anyone just starting server virtualization, with new Windows server licenses, and also to anyone expanding their farm of server hosts. To those with a substantial investment in Windows Server Standard, however, I would say stick with that and use DC only for those situations where you need to quickly move VMs from one host to another and then back again. In many cases, the 90-day limit isn't a huge barrier: production systems can run on the same physical server for a long time and may only occasionally need to be moved.

One final comment: server license counts are based on running instances, not installed instances. In an emergency, if you had to move one of the VMs on Server B (in my example) to another physical server, and Server A was already running 8 VMs, you could take down a less-critical or less-important server instance on Server A and then move one instance from Server B to Server A. When the situation on Server B was rectified, the instance that had been moved to Server A from Server B could be moved back to it. Again, no licenses were transferred, no licensing limits were exceeded, and the 90-day limit was not a constraint.

Paul DeGroot

Principal Consultant

Pica Communications

"Solving the Microsoft Licensing Puzzle"

Principal Consultant Pica Communications "Solving the Microsoft Licensing Puzzle"
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I believe you are incorrect about the 90-day rule. According to "Licensing Microsoft Server Products in Virtual Environments" it is a pre-requiesite for the old hardware to be retired:

"you may reassign software licenses for server products, but not on a short-term basis (i.e., not within 90 days of the last assignment). However, they may be reassigned sooner if you retire the licensed server due to permanent hardware failure."

Note the use of the word "permanent" - this doesn't include common outage scenarios, such as power failures, which would cause HA to be invoked.


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You raise an interesting point about what constitutes a permanent failure. In other circumstances (e.g., the desktop OS), it generally means a motherboard failure. Most other failures, such as bad disk drives or memory, are rectifiable and many not constitute permanent failure. However, I've never seen Microsoft define "permanent" in a contractual document. (It may be in some white papers or FAQs, but they are not contractual documents.)

In the case I outline here (I'm guessing that you're talking about the last paragraph), keep in mind that Windows Server licenses are not assigned to VMs. They are assigned only to physical devices. When the user takes down a less critical instance on Server A, Server A still has its original 8 Windows Server Standard licenses, but only 7 running instances of Windows Server Standard. This allows a Windows Server Standard VM from any other machine to be transferred to Server A with no impact on license assignments. No license is transferred; instead, the VM that is moved to Server A adopts the surplus license (we'll call it License 😎 that already exists on Server A. Whatever license the VM was originally covered by is still on the device to which it was originally assigned. As long as the VM's original license is not reassigned to some other physical device, the VM can be moved back to that device at any time. In short, while the VM is moved, no licenses are moved, and that's what the rule is all about--licenses, not VMs.

Principal Consultant Pica Communications "Solving the Microsoft Licensing Puzzle"
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Licensing Windows Server 2012 for use with virtualization technologies

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