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Microsoft's licensing cripples its relevance to the Amazon cloud

Microsoft is now a cloud vendor, but whether it can live in others' clouds may depend on whether it opens up its licensing.

Could Microsoft's proprietary licensing end up hurting it in the cloud?

That's the question asked on the Cloud Avenue blog, and the answer seems to be a clear "yes." Whatever the benefit to Microsoft in a desktop and server world, proprietary licensing stands to hobble its attempts to be widely relevant in the cloud or, at least, in's EC2 cloud.

Why? Because Microsoft's proprietary licensing ensures it can't be a viable player in Amazon's newly announced Paid AMI (Amazon Machine Image) Support marketplace. The program allows users to "share AMIs...with other users for a fee," but it turns out that this sharing only works with open-source operating systems:

This works well for open-source operating systems like Linux and OpenSolaris. Developers can set up the OS on local machines, build an application stack on top of it, optimize it, bundle it as AMI, and share them with other users. The freedom offered by open-source licensing allows them to be a player in this EC2 marketplace. Anyone sitting in any country in the world can offer personalized AMIs to anyone else in the world and make money out of it.

This is not the case with proprietary Windows-based AMIs. EC2 users can only take the bare-bones Windows AMIs offered by Amazon and install applications on the running EC2 instances. This is due to the proprietary nature of Windows OS licensing restricting the options for users. Under current licensing terms, there is no way for others to build an application stack on top of Windows OS, optimize and deliver it as ready made AMIs to other customers. In short, Windows based EC2 is not a player in the above-said marketplace due to its restrictive licensing policies.

Perhaps Microsoft doesn't care. Perhaps its cloud offerings will be of Microsoft, for Microsoft. But this isn't how Microsoft became the dominant desktop vendor that it is today. Microsoft dominates because it opened its technology enough to become the center of a vibrant ecosystem.

By cutting itself off from others' cloud-based offerings, Microsoft has chosen to go it alone. This could be a winning strategy, but my money is on the companies that can drive widely dispersed value from the cloud. With its proprietary licensing, Microsoft will not be among this group.