OnLive in Trouble for Violating Microsoft's Windows License?

There's no question that streaming a hosted Windows 7 environment to an iPad or Android tablet is a cool thing, especially when it comes packed with pre-installed Office apps. But now there's talk that OnLive may not have acquired the appropriate licenses to provide a Desktop-as-a-Service (DaaS) environment on tablets using Microsoft's products.

On February 29, Gartner said that OnLive Desktop and its premium variants 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. Even more, neither Microsoft nor OnLive has provided clear instructions on how users must comply with Microsoft licensing requirements.

"Using a Windows desktop through hosted virtual desktop (HVD) requires careful licensing that often includes additional products, fees or Software Assurance," the report states. "Further, Microsoft often requires service providers to license products they provide through a Service Provider License Agreement (SPLA) with monthly payments for devices running the software."

As per Microsoft's virtualization licensing policy, providing access to Windows 7 and Office products in this type of a virtual environment requires the end user (OnLive Desktop subscribers) to have valid license keys for all available products.

Gartner said that OnLive has not disclosed how it is complying with Microsoft licensing, and that if Microsoft were to conclude that OnLive is misusing its products, the Redmond company "could potentially take action against OnLive that could affect OnLive's ability to service clients." There's also potential for Microsoft to hold both OnLive and OnLive Desktop users accountable for any potential mislicensing.

After Gartner's report, Microsoft's corporate vice president of worldwide licensing and pricing Joe Matz said on Thursday in a blog that the company is "actively engaged with OnLive with the hope of bringing them into a properly licensed scenario," adding that Microsoft is committed to seeing that the licensing issue is resolved.

"Our licensing terms provide clarity and consistency for our partners, ensure a quality experience for end customers using Windows across a variety of devices, and protect our intellectual property," he states. "It’s important to us and to our partners that we’re serious about issues of compliance."

OnLive will likely announce a new licensing deal with Microsoft that will allow users to continue to use OnLive Desktop and the premium versions. However there's also a good chance that users will see an increase in price, and possibly a monthly charge for the currently free OnLive Desktop Basic version.

We reached out to OnLive for a comment, but basically received a "no comment" statement in return. "We have never commented on any licensing agreements," a spokesperson said in an email.

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  • n3uromancer
    And here we go...

    The 19th century business model (Microsoft) meets the 21st century issues.
    What if someone bought a Microsoft product, and then remotely connects to it to use it, let's say on Android phone over TeamViewer?
    Is it illegal, since you are using the product, and it is not installed on your mobile device?
    How is that different then what Onlive is doing?
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  • MKeeper
    @n3uromancer

    because you "bought" the Microsoft product in the first place.

    They are quite justified in my opinion... if OnLive are effectively selling thousands of Windows desktops to end users but haven't paid Microsoft for the same number of licenses then they are in breach.

    Equally I cannot see how they can offer a "free" Windows Desktop without incurring their own licensing costs ... perhaps they are swallowing that cost themselves? I doubt it.. it would be too expensive.

    I personally think OnLive launched this thing without thinking it through .. and just realised they are facing a massive lawsuit because they are effectively illegally distributing unlicensed access to Microsoft products
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  • hakko
    OnLive is not giving a Windows Desktop with windowing, settings and applications, it's not a proper Remote Desktop where I start applications and interact with the Windows OS itself. OnLive is serving games like a web server, giving us game "pages". Other than knowing that the games are Windows only, you can't tell what OS is there. Interesting to see what the courts say. Would this mean licences for Windows based webservers for each user connecting?
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