Microsoft: OnLive Windows Desktop-As-a-Service Violates Terms

OnLive in January launched a free version of OnLive Desktop through Apple's iTunes App Store, and last month introduced a paid version for $4.99 per month. The Palo Alto, Calif.-based vendor is also planning a professional version that starts at $9.99 monthly and includes 50 GB of secure cloud storage, and an Enterprise version with advanced management and integration options.

However, Microsoft has now decided to put its foot down.

"We 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," said Joe Matz, corporate vice president for Microsoft’s Worldwide Licensing and Pricing group, in a Thursday blog post.

OnLive, for its part, isn't commenting on Microsoft's claims. "We have never commented on any licensing agreements," a company spokesperson said in an email.

Microsoft's VDI licensing terms have long been source of frustration for channel partners, and many VARs have been scratching their heads trying to figure out how OnLive Desktop is legal. There has even been speculation that OnLive has arranged some sort of special agreement with the software giant which is being kept under wraps.

One thing Microsoft partners agree on is that software licensing needs to be uniformly applied across the channel.

"Microsoft has to treat everyone the same. If you have a set of rules, they need to apply to everyone," said Dave Sobel, director of partner community at Level Platforms, a Microsoft ISV partner. "Partners have wanted to do VDI for a while, but they have been held back by the licensing model."

[Related: OnLive Uses Cloud To Give iPad The Windows Treatment ]

Microsoft hosting partners can offer Windows 7 desktop-as-a-service through VDI, but the end customer must have an existing licensing agreement with Microsoft and they must provide the partner with evidence. However, Microsoft does not allow the hosting hardware to be used by more than one customer.

Another desktop-as-a-service option for partners is to host Windows under Microsoft's Service Provider License Agreement (SPLA) using Windows Server and Remote Desktop Services. But in this scenario, partners cannot use SPLA to offer hosted Windows 7 clients or access to Office apps through Windows 7, and the only legal way to provide Office as a service is through Windows Server and Remote Desktop Services.

In light of these terms, partners are curious as to how OnLive has been permitted to bring its desktop-as-a-service to market, and they're not the only ones. In a research note issued last month, Gartner warned would-be customers of potential issues associated with OnLive Desktop.

"Organizations and end users should note that OnLive Desktop Plus may present Microsoft licensing risks for organizations if consumers install the product on company iPads or use it to edit company documents from personal devices," Gartner analysts said in the research note.