Today virtualization is expensive for licensing. Microsoft asks people to license every OS installed on virtual machines, even if powered off.
But something is changing.
Since the release of Windows Server 2003 R2 Microsoft started approaching a per-use licensing model instead of a per-installation model.
So that now Windows Server 2003 R2 Enterprise Edition owners can run up to 4 virtual machines with same OS at no additional costs.
This trend is going be stronger in the near future: the next Microsoft operating system for servers, codename Longhorn, actually in beta, will permit to use infinite virtual machines with same OS onboard at no additional costs, buying the Datacenter edition.
So if you have a performing hardware able to run 100 VMs, you’ll still have to pay just 1 Longhorn Datacenter Server license.
This is what Scott Bekker reported on a Redmondmag December 2005 article.
This move could slighty reduce customers feeling open source competing products (Xen) are a better investment.