Last week I had another nice discussion around the 90 day assignment rule for Windows Server licensing on a VMware environment.  To answer this shortly: You may move running instances between licensed servers without acquiring additional licenses. However you cannot exceed the maximum number of instances each server is licensed to run.

Microsoft Operating System Environments (OSE)

Microsoft defines Operating System Environments for allocating licenses. This is a nice and flexible way to accommodate customer demand.  To understand how licensing works under virtualization, it is important to understand how Microsoft defines an OSE.

An “operating system environment” is:

1 all or part of an operating system instance, or all or part of a virtual (or otherwise emulated) operating system instance which enables separate machine identity (primary computer name or similar unique identifier) or separate administrative rights, and

2 instances of applications, if any, configured to run on the operating system instance or parts identified above.

Microsoft makes a distinction between physical and virtual.  A physical operating system environment is configured to run directly on a physical hardware system. The operating system instance used to run hardware virtualization software (for example, VMware) or to provide hardware virtualization services (for example, VMware) is considered part of the physical operating system environment. A virtual operating system environment is configured to run on a virtual (or otherwise emulated) hardware system. A physical hardware system can have either or both of the following:

  • one physical operating system environment and one or more virtual operating system environments

When running Windows on a VMware environment you will have multiple virtual OSE’s running on top off for instance VMware ESX.

The breakeven point of licensing VMs

Windows 2008 comes in several products and licensing opportunities.

Product Maximum permitted running virtual instances Price
Windows Server 2008 Standard (+10 CALs)


$ 1.209,-

Windows Server 2008 Enterprise (+25 CALs)


$ 3.999,-

Windows Server 2008 Datacenter (no CALs)


(1 Processor)
€ 2.999,-

A CAL is roughly about  $ 40,- (All retail prices) For keeping this simple I won’t take the CALs into account and will blog about it in a blog post later on.

When comparing the above licenses, when implementing a VMware virtual environment with servers containing 2 Quad core processors (or higher, more core density) it is best to use Datacenter licenses if it is mostly a Microsoft infrastructure running.

4 * 1.209,- = $ 4.836,-

2 * 3.999,- = $ 7.998,-

2p * 2.999, = $ 5.999,-

We found that 7 VMs is the breakeven point to switch to Datacenter edition licensing. If the virtual environment is going to run more than 7 virtual machines on top of an ESX server, Datacenter licensing is the way to go.

Some real life cases

We use Microsoft Enterprise licensing for ESXi servers running 4 virtual XenApp servers and we use Microsoft Datacenter licensing for most of the environments we have build. Often running with 16 or more Virtual Machines on top of an ESX server, makes the licensing cost per virtual machine 4.510,- / 16 = 282,-

Things you should know about Datacenter licensing

  • Servers with Windows Server Standard or Enterprise licenses covered by Software Assurance can be “stepped up” to a Windows Server Datacenter Edition processor license to take advantage of its unlimited virtualization rights.
  • The 64-bit version of Datacenter Edition can be licensed for 128-way systems, with each partition capable of supporting a maximum of 64 processors.
  • You may not run instances of Datacenter on a server with less than two processors.

Note that partitioning of a Datacenter system is supported logically at a licensing level and physical level. In other words, you are not required to obtain more Datacenter Edition server licenses than the total number of processors on that server (2 processor minimum).

Licensing for Peak Capacity

An ESX server running virtual OSE’s must have assigned licenses equal to or exceeding the number of running instances. You need to be aware and look sharp on the peak capacity running on the ESX server, with HA and DRS check how many instances could be running/landing on an ESX server. For instances a VMware cluster of 3 ESX servers all running 8 virtual OSE’s in normal production, will run 12 virtual instances on 2 ESX servers when in maintenance mode or when a HA failure is detected. So every ESX server must have 12 Windows 2008 Standard licenses assigned or 3 Windows 2008 Enterprise server licenses or must have 2 Windows 2008 Datacenter licenses assigned.

Myths and Answers

There is a lot of Fear Uncertainty and Doubt (FUD) out in the field around the whole licensing Microsoft Products on a VMware environment. So will bust the most common myths out there.

Myth: You may not move a virtual Windows server from 1 ESX server to another ESX server within 90 days.

Answer: From page 10 of the Licensing Brief Microsoft Windows Server 2008 to Run with Virtualization Technologies is the following quote:

‘For Windows Server software, except in a few cases (see “Assignment of Licenses” above), licenses may only be reassigned to new hardware after 90 days. This, however, does not restrict the dynamic movement of virtual OSEs between licensed servers. As long as the servers are licensed and do not simultaneously run more instances than the number for which they are licensed, you are free to use VMotion and System Center Virtual Machine Manager to move virtualized instances between licensed servers at will’

Myth: You do have to license every template and non-running virtual machines stored on the SAN.

Answer: You only need to license the servers running the workload, so not templates standby servers or disaster recovery machines on an other site. As long as they don’t run any load.

If a server is licensed, then stored or non-running instances of Windows Server and other Microsoft servers do not require separate licenses. The use rights permit you to store any number of instances under each license. You can also store instances on a large storage area network (SAN) or store instances on your servers without needing additional licenses for each instance. (See also page 2 of the Licensing Brief Microsoft Windows Server 2008 to Run with Virtualization Technologies)

Myth: I cannot run Windows 2003 anymore or I need to acquire special licensing to run Windows 2003/8 standard edition.

Answer: In place of the licensed version, you may run prior versions or lower editions in any of the OSEs of the licensed server. For example, if you have a server licensed for Windows Server 2008 Enterprise, you may run instances of Windows Server 2008 Standard or Windows Server 2003 R2 Enterprise Edition or Windows Server 2003 R2 Standard Edition in any of the allowed five instances on the server. As an extension of the above rights, you may also run prior versions of lower editions. You may not run more instances on the server than your licenses allow. (See also page 4 of the Licensing Brief Microsoft Windows Server 2008 to Run with Virtualization Technologies)


I must say the last year Microsoft went from the bad boy on the block of virtual environments to the good guys, helping their customers out with redesigning licensing around their products for virtual environments. Next to come is the VECD licensing that will be shifted into SA or you can buy a special Windows Virtual Desktop Access (Windows VDA) costing $100 per year per device and aimed at organizations who are using endpoints that do not have a Windows SA license.

  • As long as the servers are licensed and do not simultaneously run more instances than the number for which they are licensed, you are free to use VMotion to move virtualized instances between licensed servers at will.
  • You are allowed and may downgrade to a prior version like for example Windows 2003 if needed.

You won’t have any problems with the 90 day reassignment rule of Windows licenses, if you make sure you have the proper licensing in place for the physical VMware boxes.

Links and Sources

Good source of information regarding the subject are the Microsoft Licensing Briefs you can find here:


Continue the sequel here: How to: License Microsoft Windows Server in a VMware environment – Part 2