One of the most complex issues when dealing with virtualization is not technical: current Windows licensing scheme has not been developed with virtualization in mind, so that understanding to what and when license applies in a virtual datacenter is very vague at this point.
In October 2005 Microsoft modified its OS licensing terms so that Windows Server 2003 Enterprise Edition license allows up to 4 virtual OS instances, while the Datacenter Edition license allows unlimited virtual instances. With any virtualization platform, not just Virtual Server 2005. And announced codename Longhorn (rumored Windows Server 2007) will follow this policy.
This move doesn’t completely clarify things, letting customers confused when handling back-end servers licensing schemes (which are different from Windows one), or different virtualization approaches, like SWsoft Virtuozzo.
To partially address questions Microsoft just released a neat online calculator, showing diffences in price between Windows editions (Standard, Enterprise and DataCenter) in a virtualization scenario, with multiple physical server and different CPUs configurations: the Windows Virtualization Calculator.
Let’s hope this tool can be improved to consider more complex scenarios, where also back-end servers licenses can be calculated.