Quoting from CNET News

Right now, the computing world is clearly moving into a realm in which a single PC can be running many operating systems at the same time, and businesses want the opportunity to get the benefits of that flexibility, without having to pay over and over again for the same software.

In a major shift for Microsoft, the company decided this week to allow business customers to run up to four instances of Windows on the same PC. It's part of a sea change that has the Redmond, Wash.-based software maker and the rest of the industry headed into unfamiliar waters.

"We see virtualization as becoming a hot topic, and we want to make sure we are preparing our customers, so they can do better planning for their IT infrastructure" said Mike Oldham, a general manager in Microsoft's licensing group. As first reported by CNET News.com, Microsoft is also allowing businesses running the datacenter version of its server operating system to run an unlimited number of virtual Windows machines on that single server.

Virtualization, or technology that allows one physical PC or server to act like many separate computers, is just one of many strains on traditional software licensing. In the old days, things were simple: Each program ran once on a computer that had a single user and a single processor. Now, it is not uncommon for a program or operating system to be running multiple times on the same piece of hardware, which may be powered by multiple processors, or a single chip with multiple processing cores.

On top of this, the machine in question may not even live in the company's own data center. The company may not even run the software itself, instead buying it or renting it from a third-party hosting service.

Microsoft, for one, has been ahead of the curve when it comes to virtual machines and dual-core chip licensing practices, but somewhat behind when it comes to hosted software, said Ovum Summit analyst Dwight Davis. The company just this week finally committed to offering a hosted version of its CRM (customer relationship management) software, for example.

"Microsoft is finally starting to bite that bullet," Davis said. "It has to be a player, but it does so with some trepidation about what the impact will be on its bottom line."

Software makers are also trying to figure out how many new licensing options to introduce and when. Although some leading-edge customers are using virtualization as a mainstay throughout their company, many have yet to even try out the technology.

"How does a vendor respond when 3 percent of its customers are screaming 'bloody murder,' and 97 percent don't even know its an issue?" asked IDC analyst Al Gillen.

As tough as today's set of challenges are, there is another wave of licensing quagmires ahead.

"The next wave--and it's not going to come in a big way for a couple of years--is this idea of a dynamic IT environment, in which you scale up and scale down based on demand," Gillen said. In addition to the technological issues, companies are just now grappling with the related business question "How do you license for that?" he said.

Read the rest of the article, here.