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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For MS to make a blog post mentioning a specific company (i.e. Onlive) I can only imagine the level of shouting coming at them must have been incredible.

While I hope that Onlive have thier butt kicked by MS legal for this, the best outcome all round would be for this situation to act as a catalyst for Microsoft to provide simple hosted desktop licensing via SPLA or similiar.

Of course, they could be waiting to make hosted desktop licensing a Windows8 exclusive and use it as a method to force the horrific metro interface on everyone, or even leverage it as an "easiest (to license) on WoA devices" solution.


Two things I believe the industry needs from Microsoft: a) a SPLA license for the Windows client desktop and b) to remove the archaic requirement for dedicated hardware.  It does nothing but increase costs for the customer and service provider.

Microsoft is missing out on a huge opportunity here!  I know this sounds self serving, but living in this field every day, I see that the inbound demand for cloud hosted desktop is huge.  Customers are moving to this model despite the complexity and pain associated with the VDA license.  With mobility and consumerization driving this new model, Microsoft is stifling innovation and a revenue opportunity for themselves.  If they wait too long, there is a danger they become even less relevant.


I was following the discussions and see Brian leave the MVP program of microsoft but there is still one very simple question open that keeps running through my brain.

Why is Microsoft allowing a Windows 2008 R2 as a desktop and refuses to listen to the people in the space to allow this on desktops?

It just doesn't make sense to me.


They're waiting for Windows Server 8 to ship and this licensing issue will go away.  Delay adoption until they have something that can compete.  Why?  Because they can.

My favorite quote from the post:

"The hosting hardware must be dedicated to, and for the benefit of the customer, and may not be shared by or with any other customers of that partner."

The quote speaks for itself.


The thing with OnLive is that they already have these boxes for running the games (or so we were told). Using them for desktops is just their way of leveraging all those wasted cycles during off-peak hours.

So, I don't know that Server 8 will help them that much...I think they might be dependent on desktop OSes.

I just find it funny that I sat in their conference room and directly asked about the licensing, told them the restrictions, told them that other companies would love to get do what they're doing but can't because of restrictions, and they just said that it was fine and gestured over to their shiny demos. Repeatedly.


@Gabe - Sorry for not being clearer, Windows Server 8 includes a broker for VDI, not just RDS.  That's what will allow them to compete.

Take a look at the following doc:

In regards to your OnLive meeting, "ignore the man behind the curtain" comes to mind.  They knew what they were doing was non-compliant with SPLA.  It was a great way to get their company name in the headlines and draw attention to what their technology was capable of doing.


I have to agree with Matt on both counts. Microsoft has the means to fix its current deficits today, however I believe that it will not make the necessary changes until the launch of Windows 8 (more on that topic here if you are interested > ).

At the same time, OnLive's CEO Steve Perlman isn't stupid, we all know that it is very easy to craft a compliant solution by building on top of Windows server 2008 and we must do him the courtesy of assuming that if he had wanted to, he could have done the same at OnLive. Instead,by acting this way he has put Microsoft's ridiculous licensing policy  front and center in a way that no one else has been able to achieve.


Take 27 seconds to put a face & voice with the name...

Microsoft's Joe Matz speaks about 4 industry trends impacting licensing:

Consumerization of IT

Dynamic Workforce

Infrastructure Optimization

The Cloud

How exactly is "MS Licensing 'enabling' customers & partners to take advantage of what they deliver "?  


Link to video mentioned above:


You're all kidding yourselves if you think Microsoft is going to fix this in Windows 8. The answer is very simple. The client team who have all the power are focused on client use cases. VDI/RDS etc are just noise and some group buried deep as a feature in Windows Server who they don't give a F about. MS wants to keep the world on fat distributed desktops to protect their monopoly and consumer ambition. VDI/RDS is some boring enterprise use case to the client team. They only care about consumer for Windows. TuClould/Desktone etc are all out of business if VDI hosting is their dream and Windows 8 as I am 100% sure of offers nothing for them.  Doesn't make it right and shows how disconnected Microsoft are from the market. I hope they prove me wrong, but its just not going to happen in Windows 8 launch timeframe.


@Simon - if this is Steve Perlman's gambit to get Microsoft to change their licensing, then all apologies. But, I was in that room with him, asking him direct questions to which, at best, he did not know the answer to. His responses weren't "I can't talk about that" or "yeah, I know," they were "That's not the important thing, the important thing is that..." and then he showed some demo that we used to show people that were new to MetaFrame back in 1998, but on an iPad.

I just don't believe that this will have any more impact than any of the other DaaS providers out there. In fact, OnLive's Windows games might be in jeopardy if Microsoft decides that those are also being delivered in a mis-licensed way. Yikes.


Why do you want MSFT to change anything ?

To be nice with couple of technical geeks ?

They follow the law of Supply and Demand and will only change it when THEY will need it...

... and this is not the couple of millions of virtualized desktops that will change this soon.


I don't want them to change anything, I just want them to add something (the SPLA license), or at least force OnLive to play by the same rules.

DaaS is a legitimate service that is made inefficient (no shared hardware) and costlier than it needs to be by the lack of the SPLA license.


I believe you are correct Gabe, Onlives game service will be affect by this too.


Things can and should change at Microsoft.  A small example of change was the pricing structure for Education.  We used to pay by the number of hardware pieces (devices).  Now we pay by the number of core (full time) teachers.  The end result was a 15k drop in annual pricing for us.  There is hope.  Keep up the pressure.


As of July 2012, I still don't see how OnLive is fully compliant with Microsoft SLPA licensing...

Their "OnLive Desktop Standard" plan continues to be free, despite the fact that it includes Microsoft Word, Excel, and PowerPoint. SPLA pricing on those three products is around $15 per month.

Are they operating at a loss? Seems really unlikely...