Desktop as a Service – From OnLive to Now: Is DaaS in the Near Future for Microsoft?

By Stephen Covert

The OnLive Situation

Earlier this year, the buzz in the industry was that for a small fee, OnLive, a hosting facility, would provide access to a virtual Windows Desktop. I first learned about the service in February when I overheard a hallway conversation where an executive asked our network group to open a firewall port to allow access to the service. I was not sure whether or not a firewall port needed to be opened, but I did know that OnLive’s offer seemed a little extraordinary given that Microsoft prohibits hosting facilities from providing Windows desktops on shared servers. I immediately asked if I could be involved and explained that while OnLive was the entity providing this service, our company could be the one in violation of Microsoft’s licensing rules.

My first action was to contact OnLive’s customer service and ask them if they had a special agreement with Microsoft. After several attempts at getting an answer to my question and getting a complete runaround, I decided to contact Microsoft to see if they could confirm that OnLive was properly licensed. The answer was no, they could not confirm that OnLive was properly licensed. Given that I was going to need to tell an executive that we would not be able to complete his request and that I wanted to stay in the good graces of my employer, I asked that Microsoft put their response in writing. The representative was not willing to provide their response in writing. The lack of documentation would require me to reject an executive’s request without any paper trail, which started to make me nervous.

At that point I did what I always do when I have a tough decision to make— I research more. Hoping that I would find some clue that would make the OnLive service seem legal, I looked at the leaders of OnLive. This did not help my cause any, and to further confuse the issue, the OnLive leadership biographies read like the who’s who of technology. After continued research and fretting, I finally gave in and provided my write-up, stating that I was not confident that we would be in compliance with Microsoft’s licensing if we allowed this service.

Fortunately, a few weeks after I wrote my statement, Joe Matz, Corporate Vice President of Worldwide Licensing and Pricing for Microsoft issued a statement that Microsoft was working with OnLive to ensure license compliance. The media immediately questioned how OnLive could ever make such a mistake without checking the licensing first.

What Does the OnLive Incident Mean?

Ever since this incident, I have been puzzled by the actions of OnLive. It seems to me that those running OnLive must be far too smart to simply forget about the licensing of third party software given the experience of their executives. I just do not buy it. In the meantime, Microsoft has continued to provide virtualization rights to their products that are covered by Software Assurance, which started me thinking, “Maybe Microsoft is about ready to put Windows desktops in the cloud and change their licensing to make OnLive’s service more feasible.”

In the direct marketing business, a “dry test” is done to gauge the market demand before the product is ready to be put on the market. What if the whole OnLive event earlier this year was a dry test for Windows Desktop as a Service (DaaS)? Do I have proof? No, but it would help to explain this bizarre event.

Actually, this scenario may be a complete fabrication of my mind, but I do feel that Microsoft is approaching the time when they will be providing DaaS. Let consider the theory that once Microsoft has the software in place to manage Virtual Desktop Infrastructure (VDI) in the public cloud; they will change their licensing to make a hosted VDI a cost-efficient option for organizations.

Cloud Attributes

Throughout the past few years, I have heard many complaints of how Microsoft has made it impractical for organizations to have their desktops hosted at an offsite service. Presently, Microsoft’s licensing makes hosted VDI solutions unreasonable because prospective tenants may only run their virtual desktops on physical servers that they own. This requirement makes VDI less attractive to organizations because it restricts the efficiencies gained though sharing resources between multiple tenants.

Along with the sharing of resources, the following attributes are what Microsoft states are required for a cloud solution:

  • Shared Services
  • Scalable and Elastic Services
  • Self-Service
  • Usage-based Chargeback

Microsoft does not have the software in place to provide these four attributes at this time, but when they do, why not change their licensing to allow VDI in the public cloud?

The following will further explain the above four attributes and the benefits that they provide through a hosted facility.

Shared Services

Shared Services is one of the primary attributes that makes VDI at a hosted facility more economical than companies hosting VDI at their own facility. The sharing of the following three assets with other tenants reduces the start-up and ongoing costs compared to a non-shared solution:

  • Hardware
  • Software
  • Human resources

As server operating systems virtualization allows reduced hardware costs, cloud VDI provides a platform for shared equipment between multiple tenants for a similar reduction in hardware costs. Without the ability to share equipment between tenants, each tenant would be required to run their own hardware at a lower capacity, increasing the costs for each tenant.

Also, the sharing of software provides the opportunity to reduce the tenants’ costs by avoiding the direct upfront purchase of software. For example, a tenant could avoid the purchase of desktop management software by appointing the hosting facility to manage the desktops on their behalf.

Another benefit of placing VDI in the cloud can be realized through the sharing of human resources to implement and maintain a VDI solution. The implementation and ongoing maintenance of a VDI solution requires a specialized skill set that would be better suited in an environment where that talent could be shared across multiple tenants rather than each tenant hiring their own set of employees.

Scalable and Elastic Service

One of the risks to self-hosting a VDI solution is the shifting demands on an infrastructure as the number of desktops increases. The infrastructure required for each phase of a VDI implementation could be different than the network configuration of the previous phase. For example, a company could complete a successful VDI proof of concept and receive permission to proceed with the VDI solution. When they implement additional virtual desktops, they may find that the infrastructure used to provide a successful proof of concept will not sustain a slightly larger audience. The need to replace the existing infrastructure to support the additional users of a VDI solution could require an unplanned request for capital. This same scenario could occur multiple times when the VDI implementation hits another infrastructure threshold. For an organization that is unaware of these dynamics, the repeated request for more money could create the appearance that a project is out of control.

The entity could elect to avoid the repeated request for capital by initially building the final infrastructure needed for a fully implemented VDI solution, but this approach would require a large initial capital expenditure. Though this all-or-nothing approach removes the inefficiencies of both repeated infrastructure rebuilds and requests for capital, it provides a greater exposure to risk in the event that the implementation is unsuccessful.

A hosting facility, on the other hand, already has the infrastructure in place to provide a virtually unlimited number of new desktops to a tenant at a consistent cost per desktop. Thus, a hosted VDI solution avoids both issues related to a self-hosted VDI solution. The costs depend on the number of implemented desktops and resources used, which provides predictable costs even when adding to that number of virtual desktops.


Having unlimited desktop capacity availability such as off-site Microsoft servers could provide is more beneficial to a tenant if routine requests can be:

  • Made directly by the business unit
  • Fulfilled quickly

Microsoft’s vision is to provide the tenant with software capable of executing routine tasks such as allocating a desktop and without the customary delays. For instance, the marketing department requests that a desktop be set up with the tools required for a given person. Rather than making a request for a physical desktop and waiting for days or weeks to receive the requested desktop, the marketing department submits a request for a new virtual desktop and receives it with the underlying infrastructure configured immediately. This would provide the end user with the capability of requesting and receiving desktops as they are needed.

Usage-Based Chargeback

This final attribute provides the hosting facility the capability to charge their shared equipment tenants based on the resources that each tenant utilizes. Without the capability of reporting each tenant’s resource usage, the hosting facility cannot bill the individual tenants and would not be able to provide a shared environment.

What is Next?

Until recently, Microsoft has focused on improving their virtualization offering. Now, they are focused on adding the functionality for the four capabilities listed above to their products. As a next step, consider examining the progress Microsoft is making to increase virtualization capabilities and the licensing changes that are happening associated with these changes. Beyond those improvements, consider the capabilities needed to enable a cloud based VDI service for Microsoft.

I feel that Microsoft will change the licensing to make hosted VDI practical. I predict that these capabilities will be in place in the next six to ten months and that Microsoft will be changing their licensing in concert with the release of the toolset.

Information in this article was previously published in blog format:

About the Author

Stephen Covert is the Manager of Vendor Services for Highlights for Children, Inc.