Gasp! Turns out OnLive really isn't in compliance with Microsoft licensing!

OnLive (the same company that streams games to you across the web) has put together a Windows 7 DaaS solution called OnLive Desktop that they make available for free or for a small charge.

From the "News we already knew, in spite of the fact that nobody would confirm it" department, we have an update on the OnLive Desktop and Desktop Plus offerings that have drawn the attention of a large number of industry experts and analysts over the past few months. If you're not familiar with the situation, OnLive (the same company that streams games to you across the web) has put together a Windows 7 DaaS solution called OnLive Desktop that they make available for free or for a small charge. We wrote two articles about this if you'd like to catch up (don't forget to read the comments):

Breaking down OnLive Desktop: Why this is not the desktop virtualization solution you're looking for

OnLive loose ends: Are they using VMware? Dedicated hardware? Custom licensing? Plus, are they on Microsoft's acquisition radar?

Across the industry, people wondered how they could pull this off. They simply had to be losing money when you factored in Microsoft licensing. After all, it was Windows 7, not Windows Server 2008, which has a simple SPLA license. Windows 7 VDI licensing is much more complex. Were they ignoring the rules? Did they have some fancy combination of blade PC's and dedicated hardware that precluded them from having to deal with typical Windows VDI licensing (VDA for every device that accesses desktops)? Did they have a special agreement with Microsoft? Whatever was happening, it was certainly not in compliance with Microsoft's licensing for Windows 7.

I even had a meeting with OnLive's CEO Steve Perlman, where I asked him about how it all worked. Here's an excerpt from my first article:

I posed these questions to Steve several times, and never got an answer besides (and I'm paraphrasing) "it depends" or "that's not the hard stuff--the hard stuff is in delivering this experience."

I was told that OnLive has licensing experts that have all this worked out, but I was never told how that could be. I explained the licensing issues, the SPLA, the VDA, the fact that there are dozens of DaaS providers that are trying to accomplish the same thing but can't due to Microsoft licensing restrictions. Each time, my question was deflected and focus shifted over to the device demos. 

It turns out the licensing experts dropped the ball, and that all the evasiveness and tap-dancing that Steve did during that meeting was for good reason:

Yesterday, Microsoft's VP of Worldwide Licensing and Pricing, Joe Matz, wrote a blog post that specifically says that OnLive is not playing by the rules. He cites media coverage as well as analyst coverage from Gartner for bringing their attention to the matter, and say that they are "…actively engaged with OnLive with the hope of bringing them into a properly licensed scenario, and we are committed to seeing this issue is resolved."

I should add that we posed direct (followed by indirect) questions to Microsoft through official channels and got no response (you can read the transcript or listen to our podcast here). In fact, it's a significant reason Brian Madden vacated his Microsoft MVP status. To him, there was no point if Microsoft was just taking, while not giving anything back in return (like simple license compliance information), all while holding the industry back by ignoring all the suggestions coming their way.

To let OnLive continue to do this is a slap to the face of DaaS companies like tuCloud, Desktone, and many others. These companies have been playing by the licensing rules from day one, and have had to stand by and watch as OnLive does the same thing they've been trying to do while ignoring the rules. However great the OnLive solution may be (which is arguable, but it has it's plusses), it's not fair to the companies that have been doing it correctly if OnLive is allowed to continue offering their solution while in violation of the agreement. Nevermind that they had the audacity to build and release a solution either knowing or being blind to the fact that they weren't in compliance. I told them what the licensing situation was, and they simply glazed over it. That's dirty pool.

The easy way to solve this is for Microsoft to get on with adopting a SPLA license for Windows 7. I don't know what the argument is. They've never had one for a desktop OS before, but it's 2012 now, and the world is much different than it was five or ten years ago. If they think they'll lose money, they need to evaluate the business they're losing by NOT having a more appropriate licensing solution. Nobody is saying it has to be cheap, but it does have to be there so that companies can build more efficient infrastructures and deliver desktops to more use cases.



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