Virtualization rights for Windows Server 2008
Microsoft has made their licensing much more friendly to virtualization with the release of the 2008 server product. It is still confusing, especially with the differences between Hyper-V and VMWare/VirtualBox/EverythingElse.
Basically, if you are running the Hyper-V role on Server 2008 standard, you get two installations of Windows 2008 for the price of one. One acts as host (and that is it. it only acts as a hyper-v host) plus you get one free Virtualized OSE (operating system environment). If you are running Enterprise, you get 1 free host (running just hyper-v and nothing else) and up to 4 free virtual OSE's. With datacenter, you get unlimited free VM's.
Since products like ESXi are free as well, it has been asked what advantage this really gives you. Well , if you are running a Core install of server 2008 as your hyper-visor, you can monitor the services, automatically patch, and apply security policies to your hosts, just like you can with regular windows servers, but you don't give up the low resource usage and reduced attack surface of a more stripped down OS like the Linux that serves as the basis for ESXi. Plus, if it breaks, you call Microsoft and they fix it for $250, rather than having a whole separate licensing scheme and updating process for ESXi. There is nothing worse than building your environement on two vendors and having them point their fingers at each other.
If you are running a different product, you are similarly limited. The wording is complicated, but basically they say you get one VM per license. If you are running Standard server on VMWare ESXi, you burn that license on the first one and have no extras.
"If a server is running ESX as the virtualization technology, then Windows Server is not deployed as a host operating system in the physical OSE. However, a license is required for every instance running in a virtual OSE.
If you have assigned a single license for Windows Server 2008 Standard to a server running ESX, then you may run one instance of Windows Server 2008 Standard at a time. The right to run an instance of Windows Server 2008 in the physical OSE cannot be used in this case since ESX runs on the physical OSE (and as a result, Windows Server 2008 cannot be deployed as the operating system on the physical OSE.
If you have assigned a single license of Windows Server 2008 Enterprise to the server running ESX, then you may run up to four instances at a time of Windows Server 2008 Enterprise. You may not run a fifth instance under the same license since that right requires that the fifth instance be running hardware virtualization software and software managing and servicing the OSEs on the server."
From the horse's mouth (Word 2007 required):