Hosted VDI and Microsoft SPLA redux

So, I have wrangled and researched this issue to death to try to come up with some way that I, as a managed services provider, can host shared Windows desktops on shared infrastructure using XenDesktop and still be compliant with our SPLA and SPUR.  I’ve resigned myself to the fact that it can’t be done presently in the way that XenDesktop works.  The more I thought about the technical complications and ramifications of this, the more I became angry and befuddled about why Microsoft’s licensing for VDI is so restrictive, particularly when one considers all the missed revenue opportunities for both Microsoft and it’s partner community, including the hosting community that MS spends a lot of time and resources supporting.  My company, as an aspiring cloud provider, and me, as an aspiring cloud architect, am seeking to provide Windows desktop OS’s as a service to multiple tenants (my customers) taking advantage of my shared virtualized infrastructure.  To do so under SPLA, the following two tenets MUST apply or I am in violation of the SPLA and SPUR:

  1.  End customers must individually purchase licenses and give them to the “Cloud Provider” (in this case, us) for hosting virtual desktops.  This assumes that the customer has a volume licensing agreement with Microsoft under which the aforementioned licenses are procured.
  2. Those licenses can only be used to connect to hardware that is dedicated to that tenant and not shared.

Microsoft claims that yes, in fact you can host “desktops” using RDS from a Windows Server 2008R2 OS.  Okay, well, for anyone that has regulatory requirements to adhere to, that’s just not an option as that option is not possible in a multi-tenant shared architecture.  We’ve run into that same issue with Citrix published desktops and security or regulatory requirements before.  So again, I’m relegated to putting each customer on their own hardware or virtual server instance in order to facilitate that solution.  Depending on your cost model, that may or may not be profitable as a hosting offering, and has its technical limitations depending on the desktop use case.  Basically, I lose all of the efficiency, scalability, and investment that I have put into building Provisioning Services, XenDesktop, and to some extent XenApp, in this scenario.  The same would seemingly be true if I had built everything on Hyper-V?  Shame on you, MS.

Back to the business case – let’s examine the revenue streams from hosting architecture.   If I follow the RDS desktop scenario, MS will get paid on the server license that I buy as well as the SPLA revenue from the client license.  If I were able to host desktops with a Windows 7 OS, it would seem to follow that Microsoft would stand to get twice the current revenue from the additional desktop OS if I were allowed to serve up to them under SPLA.

The Microsoft Partner Community, particularly each and every organization that attends things like the Hosting Summit, etc. are all potential revenue generators for Microsoft if they are allowed to be successful and innovative in offering and delivering the technologies that currently exist and that there is a huge (and growing) market for, instead of being choked out by the non-permissive and provider-prejudiced stance of the SPLA.  I fail to see how Microsoft can ignore the market so overtly for this long.  We’re all losing out on this the longer this goes on.  It also seems to be a slap in the face to their strategic partner, Citrix, without whom Microsoft wouldn’t even have a go-to-market option for REAL, ENTERPRISE level virtual desktops.  I see an opportunity for Citrix to make available a non-Windows guest into which I can stream all of my apps using Receiver and XenApp.  It would seem that I would be out of the woods from SPLA then and could give my customers what they want.

At this point, my organization’s product management team has officially given me the stand-down order on my hosted VDI development project as we simply cannot come up with a cost model that supports it.  While we are investigating innovative and interesting options like Kaviza, it’s not on our short-term radar yet.  In the meantime, I have to tell my current and prospective hosting customers “NO”.  What I can’t figure out is why that is not as unacceptable a response to Microsoft as it is to the rest of us in the hosting community.


2 responses to “Hosted VDI and Microsoft SPLA redux

  1. Hi,

    I too run a MSP who are getting into the ‘Cloud’ space. We are also seeking to provide VDI as a service to clients. I find it completely ridiculous Microsoft are restricting service providers from providing the service our clients are desperate for.

    We are currently providing the service using terminal services, however it really doesn’t provide the real desktop experience to users.

    Unfortunately at this stage Microsoft have not released any plans to meet the market demand of SPLA VDI, which is a real shame.

    If you hear anything new on this subject, please drop me a line. I will do the same in reverse.


    • Gerard, congratulatoins on being the first subscriber to my blogging effort. I will certainly keep you in the loop. We have had conversations with Microsoft and the future of this issue does not look promising. I suspect that there will be a hosting compliant offering that is centered around the Hyper-V stack, but I have reservations about how that might actually look and more so around how many of us would actually find a cost benefit in discarding all of our Citrix or VMWare licenses to be able to host a Windows desktop. Honestly, it would be easier for me to develop a hosted desktop that runs a Linux- based OS and deliver my apps into that desktop using some flavor of application hosting or virtualization. From what I have heard (and this is purely hearsay), the SPLA VDI restriction stems from the large number of SPLA variants that are localized for each global market. There would have to be a global mandate to allow for this in every country that has its own SPLA terms, and the likelihood of that happening for various reasons beyond my understanding are slim to none.

      It is a shame, and I see it as a black mark on their whole cloud marketing effort that they are prominently pushing out now (especially the new, and admittedly funny, VMLimited campaign, released just as VMWorld Las Vegas got underway). It’s like they are focusing more on private cloud hosting and totally ignoring the complaints and needs of the multi-tenant hosting provider who wants only to host a Windows desktop OS for their customers. Perhaps it’s the myth that Brian Madden spoke about in his recent and colorful analogy . Maybe there’s not enough VDI margin out there, especially with Microsoft not having a competetive offering of its own, to make it worth it to change anything in SPLA. Maybe if the market shows greater true adoption and increases in installed seats and a trend towards significant desktop virtualization, we’ll see Microsoft change their stance and throw a bone to us in the Hosting community.

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