In this posting I will explain the two different ways to license and pay for Microsoft’s desktop operating system in a virtual desktop environment and also examine the facts and logic behind it.
Virtual Desktops – A Quick Primer
Virtual desktops or desktop virtualization is the idea of installing the desktop operating system (in most cases Microsoft Windows) on a virtual machine hosted on a server in the datacenter instead of onto the device that sits under the user’s desk. The user then uses some type of client device, usually a repurposed legacy PC or a thin client) to remotely control that virtual machine.
I will not go into the details of the benefits of this technology but sufficed to say that they are significant and 2010 is the year that CxOs and technology leaders will be looking at desktop virtualization. If anyone is interested in exploring this technology then please feel free to contact me directly.
Two Models to License
Depending on the client that you will use to access the virtual desktop, there are two different licenses that you can purchase. Both are labeled and marketed under the banner of Microsoft Windows Virtual Enterprise Centralized Desktop (VECD). This also used to be referred to as Microsoft Windows Vista Enterprise Centralized Desktop and some of the material you find on their site still uses this branding, but the model is the same regardless.
Scenario 1: Thin Clients or Repurposed Legacy Desktops without Software Assurance
I’ll first explain the model that will apply in most cases. It applies when the organization is planning to repurpose legacy PCs as clients and has not purchased Microsoft’s Software Assurance (SA) option on their Microsoft Windows desktop operating system licenses. If you are unsure if you have, then you probably have not done this. You will usually only have this if:
If you are planning to use thin clients either with Windows XP embedded or an alternative operating system then this first model also applies to you regardless of the above.
In this scenario, customers are required to purchase the Microsoft VECD license for every device that will access the virtual desktops. The list price of that license is $110 per device per year and the commitment is three years. Therefore over the course of the three years you would be paying $330 total. Customers have the option of paying annually or upfront in full.
Note that you must buy a VECD license for every unique device accessing the virtual desktop. If a user wants to use their corporate thin client and their home desktop to access the virtual desktop at different times then you must buy two VECD subscriptions. This is the one point of contention that is making virtual desktop ROI more difficult to prove if one of the reasons for implementing it is accessing that desktop from multiple clients in multiple locations.
This license entitles you to run the latest version of the Windows operating system in the Enterprise Edition. As you continue to subscribe and future releases of Windows come to fruition, customers are entitled to those new releases as part of their subscription.
Scenario 2: Repurposed Legacy PCs with Software Assurance
Those customers who have purchased SA on their desktop operating systems either through an Enterprise Agreement or explicitly have less to pay. These customers may purchase VECD for Software Assurance, which is priced at $23 per device per year.
There is one complication here that some may notice. Let’s assume you choose to repurpose legacy PCs with SA and purchase the $23 per device per year license and as those legacy PCs fail you will replace them with thin clients. In this scenario, you would have to transfer from the $23 license to the full VECD license, regardless of the state of your SA because the thin clients do not come with a base Windows operating system license (XPe does not count) and therefore are not covered. As yet, I have not found a way around this.
From July 2010, this $23 charge will disappear and VECD for desktops covered by Software Assurance will be included for free, but in order to access the virtual desktop from non-corporate clients not covered under SA such as home PCs or Macs, you will have to by a Virtual Desktop Access License priced at the original $110 per year for every unique device.
Reactions and Objections
“Double Dipping”
So, by now you might be rethinking desktop virtualization as you have an additional $360 to find for every desktop and it brings into question the TCO value proposition. Some customers have described this as “double dipping” by Microsoft but let’s take a look at what Microsoft is actually taking as part of this deal.
If you purchase regular Microsoft Windows Enterprise Edition desktop operating system licenses with a traditional desktop PC you would be spending around the same sort of money. The difference is that the licensing costs are baked into the cost of that desktop PC. This model takes a hidden cost and makes it visible to the customer, but it doesn’t actually change the amount of your money that Microsoft is taking and at the end of the day it is the same software that you are getting so actually I don’t have a problem with this particular issue.
Microsoft Desktop OS Refresh Cycle in the Real World
There are however a couple of other issues. One might argue that that a new Windows operating system that customers actually find useful and want does not get produced every three years. Many organizations did indeed skip Vista and got eight years out of Windows XP and many are still running it now.
Having said that, if you are one of those people who have got eight years out of Windows XP, the likelihood is that you have not purchased it just once. You have actually purchased it once for every time you have refreshed your desktop hardware because the price of a new license is baked in to the cost of that hardware. Given that the average lifespan of desktop / laptop hardware is four years, you would actually have purchased that operating system twice.
TCO/ROI
First, an IDC report (if you would like to see it then contact me directly) has shown that in a traditional desktop environment for every $1 spent on desktop hardware, a further $3 is spent on supporting that hardware over the course of its life. The same report shows that virtual desktops only cost $1.20 to support over the same time period. This alone is a saving of 60% in support costs and will more than pay for the backend infrastructure and other capital costs involved in the project.
Add to this the soft benefits in flexibility and business agility that desktop virtualization brings to the table.
Users can now access their own desktop from any internet connected terminal.
Licensing the Windows desktop operating system through VECD for virtual desktops is actually relatively simple once explained in the right way. The initial knee-jerk, negative reaction to Microsoft’s model is actually not a valid objection and neither is the one regarding the damage it does to the ROI promised by desktop virtualization.
Two Models to License
Depending on the client that you will use to access the virtual desktop, there are two different licenses that you can purchase. Both are labeled and marketed under the banner of Microsoft Windows Virtual Enterprise Centralized Desktop (VECD). This also used to be referred to as Microsoft Windows Vista Enterprise Centralized Desktop and some of the material you find on their site still uses this branding, but the model is the same regardless.
Scenario 1: Thin Clients or Repurposed Legacy Desktops without Software Assurance
I’ll first explain the model that will apply in most cases. It applies when the organization is planning to repurpose legacy PCs as clients and has not purchased Microsoft’s Software Assurance (SA) option on their Microsoft Windows desktop operating system licenses. If you are unsure if you have, then you probably have not done this. You will usually only have this if:
- You have an Enterprise Agreement with Microsoft that covers the desktop operating system.
- You actually explicitly went out and purchased SA for every desktop as an add-on the OEM license you got with the PC.
If you are planning to use thin clients either with Windows XP embedded or an alternative operating system then this first model also applies to you regardless of the above.
In this scenario, customers are required to purchase the Microsoft VECD license for every device that will access the virtual desktops. The list price of that license is $110 per device per year and the commitment is three years. Therefore over the course of the three years you would be paying $330 total. Customers have the option of paying annually or upfront in full.
Note that you must buy a VECD license for every unique device accessing the virtual desktop. If a user wants to use their corporate thin client and their home desktop to access the virtual desktop at different times then you must buy two VECD subscriptions. This is the one point of contention that is making virtual desktop ROI more difficult to prove if one of the reasons for implementing it is accessing that desktop from multiple clients in multiple locations.
This license entitles you to run the latest version of the Windows operating system in the Enterprise Edition. As you continue to subscribe and future releases of Windows come to fruition, customers are entitled to those new releases as part of their subscription.
Scenario 2: Repurposed Legacy PCs with Software Assurance
Those customers who have purchased SA on their desktop operating systems either through an Enterprise Agreement or explicitly have less to pay. These customers may purchase VECD for Software Assurance, which is priced at $23 per device per year.
There is one complication here that some may notice. Let’s assume you choose to repurpose legacy PCs with SA and purchase the $23 per device per year license and as those legacy PCs fail you will replace them with thin clients. In this scenario, you would have to transfer from the $23 license to the full VECD license, regardless of the state of your SA because the thin clients do not come with a base Windows operating system license (XPe does not count) and therefore are not covered. As yet, I have not found a way around this.
From July 2010, this $23 charge will disappear and VECD for desktops covered by Software Assurance will be included for free, but in order to access the virtual desktop from non-corporate clients not covered under SA such as home PCs or Macs, you will have to by a Virtual Desktop Access License priced at the original $110 per year for every unique device.
Reactions and Objections
“Double Dipping”
So, by now you might be rethinking desktop virtualization as you have an additional $360 to find for every desktop and it brings into question the TCO value proposition. Some customers have described this as “double dipping” by Microsoft but let’s take a look at what Microsoft is actually taking as part of this deal.
If you purchase regular Microsoft Windows Enterprise Edition desktop operating system licenses with a traditional desktop PC you would be spending around the same sort of money. The difference is that the licensing costs are baked into the cost of that desktop PC. This model takes a hidden cost and makes it visible to the customer, but it doesn’t actually change the amount of your money that Microsoft is taking and at the end of the day it is the same software that you are getting so actually I don’t have a problem with this particular issue.
Microsoft Desktop OS Refresh Cycle in the Real World
There are however a couple of other issues. One might argue that that a new Windows operating system that customers actually find useful and want does not get produced every three years. Many organizations did indeed skip Vista and got eight years out of Windows XP and many are still running it now.
Having said that, if you are one of those people who have got eight years out of Windows XP, the likelihood is that you have not purchased it just once. You have actually purchased it once for every time you have refreshed your desktop hardware because the price of a new license is baked in to the cost of that hardware. Given that the average lifespan of desktop / laptop hardware is four years, you would actually have purchased that operating system twice.
There is no way around this in case you are wondering. OEM licensing that comes with your desktop or laptop lives and dies with that device. It cannot be transferred.
TCO/ROI
The final objection that I’m seeing from customers is that the cost of the licenses that is sometimes overlooked at the early stages of the project discussion brings into question whether desktop virtualization TCO/ROI presented is still relevant. There are several other factors that make up the compelling desktop TCO reduction when virtualizing, which make this a non-issue.
First, an IDC report (if you would like to see it then contact me directly) has shown that in a traditional desktop environment for every $1 spent on desktop hardware, a further $3 is spent on supporting that hardware over the course of its life. The same report shows that virtual desktops only cost $1.20 to support over the same time period. This alone is a saving of 60% in support costs and will more than pay for the backend infrastructure and other capital costs involved in the project.
Add to this the soft benefits in flexibility and business agility that desktop virtualization brings to the table.
Users can now access their own desktop from any internet connected terminal.
- Desktops can be integrated into disaster recovery strategies that leverage replication to a remote site. The user will have their own desktop in a DR scenario, wherever they may be. This eliminates the largest remaining spanner in the works of a disaster recovery plan post-virtualization of servers - the device the user uses to access applications.
- New desktops can be provisioned automatically, on demand. New hires no longer sit around waiting for IT to image their desktop. Existing employees need not wait for a day or more for them to prepare a replacement if they lose their client device, it fails or becomes infected with malware. We simply replace that device with another dumb terminal or any old desktop/laptop.
- Bring branch offices where there is no local IT support into the mix and the benefits begin to multiply.
Licensing the Windows desktop operating system through VECD for virtual desktops is actually relatively simple once explained in the right way. The initial knee-jerk, negative reaction to Microsoft’s model is actually not a valid objection and neither is the one regarding the damage it does to the ROI promised by desktop virtualization.
Desktop virtualization will revolutionize the way we manage our users’ experiences and reduce the cost of supporting those users significantly despite the concerns raised by initial reactions to Microsoft's licensing model.
