Microsoft disputes OnLive's use of Microsoft Office

OnLive branched out of their streaming game service earlier this year when they launched their OnLive Desktop service for the iPad. The company offers cloud-based versions of several of the programs in the Microsoft Office software suite via their high speed connections to iPad owners. The Desktop Plus service adds super-fast access to the Internet via Internet Explorer 9. OnLive recently added support for a number of Android-based tablets.

Now Microsoft is taking notice of OnLive's activities and it apparently doesn't like what it sees. In a post on the Microsoft Volume Licensing blog site, the company says that their Services Provider License Agreement "does not support delivery of Windows 7 as a hosted client or provide the ability to access Office as a service through Windows 7.  Office may only be provided as a service if it is hosted on Windows Server and Remote Desktop Services."

According to Microsoft's statement:

We are actively engaged with OnLive with the hope of bringing them into a properly licensed scenario, and we are committed to seeing this issue is resolved. In the meantime, it is of the highest importance to Microsoft that our partners have clear guidance so that they can continue to deliver exceptional expertise and creative solutions to customers within parameters of licensing policies.

So far, OnLive has yet to respond to Microsoft's blog post but we have emailed their to get a statement.

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21 Comments

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doesn't onlive offer a VDI anyways.... aren't the terms that are applied to VDIs applies to this?? Companies like Virtuon offer vmware VDI with office.

I'm not saying that it was right for them to use Microsoft software in an unlicensed manner, however I can understand how this happened. Microsoft's licensing is horribly convoluted and the restrictions make it prohibitively expensive. Realistically, to offer such a service and still make it economically viable, their only hope to be legally licensed is to have a custom licensing agreement with Microsoft.

If you use Microsoft Office on a fixed set of devices (eg: all of your PCs/iPads, which remain the same PCs/iPads throughout the license) then Microsoft licensing is not a problem, you just pay for your license for each PC and you are on your way.

The problem is with the license restrictions and being licensed per device rather than per-user. Basically, if you have a variable number of devices, even if not concurrent, then you are screwed.

PKC: 1 user at a time can use it locally one physical or one virtual host within the physical machine, remote access rights ONLY FOR THE MAIN USER
Retail: Same as OEM plus 1 "portable" device.
Volume: 1 user at a time can use it locally on physical host, remote access rights included FOR THE MAIN USER, additional remote access rights extend to other users as long as the device they use is also licensed for exactly the same SKU of Microsoft Office (eg: 2010 Standard or 2010 Professional Plus) ON EACH DEVICE. So if the same user has an iPad and a PC that the same user uses exclusively for themselves, they will need two licenses.

Now the kicker (to make it prohibitively expensive to offer remote access rather than locally), Volume licensing allows ONLY two SKUs - Standard and Professional Plus. So instead of paying your $185 for Home and Business, you have to pay about $585 for Standard - for each DEVICE (Not even for each user) - A $400 premium for the privilege of using the software remotely if you are not the main user, and need it to be installed on a remote host that has multiple users accessing the software.

OnLive would need to charge at least ~$585 (Just in Licensing costs, not even their own costs) PER IPAD to offer it on Microsoft's terms. It is not going to be happen, because most users will not be prepared to pay this much to make the service viable. As an idea of comparison, you could buy a PC with OEM Windows 7 Pro (Pro is licensed for Remote Access to the OS) and Office home and Business PKC to remote into yourself (As it is installed once, accessed remotely only by the primary user) for less than this.

If Microsoft had any sense they will 1) give OnLive favorable licensing terms in this instance to prevent this market from falling into the hands of their competitors and 2) fix Microsoft licensing terms of Microsoft Office for Remote Access (RDS/Citrix etc.) and Virtual Desktop (eg: VDI) users to make it so at the end of the day, it is not more expensive than the PKC/Retail product and allow per-user licensing to be used like they do with Windows

Simon- said,
I'm not saying that it was right for them to use Microsoft software in an unlicensed manner, however I can understand how this happened. Microsoft's licensing is horribly convoluted and the restrictions make it prohibitively expensive. Realistically, to offer such a service and still make it economically viable, their only hope to be legally licensed is to have a custom licensing agreement with Microsoft.

If you use Microsoft Office on a fixed set of devices (eg: all of your PCs/iPads, which remain the same PCs/iPads throughout the license) then Microsoft licensing is not a problem, you just pay for your license for each PC and you are on your way.

The problem is with the license restrictions and being licensed per device rather than per-user. Basically, if you have a variable number of devices, even if not concurrent, then you are screwed.

PKC: 1 user at a time can use it locally one physical or one virtual host within the physical machine, remote access rights ONLY FOR THE MAIN USER
Retail: Same as OEM plus 1 "portable" device.
Volume: 1 user at a time can use it locally on physical host, remote access rights included FOR THE MAIN USER, additional remote access rights extend to other users as long as the device they use is also licensed for exactly the same SKU of Microsoft Office (eg: 2010 Standard or 2010 Professional Plus) ON EACH DEVICE. So if the same user has an iPad and a PC that the same user uses exclusively for themselves, they will need two licenses.

Now the kicker (to make it prohibitively expensive to offer remote access rather than locally), Volume licensing allows ONLY two SKUs - Standard and Professional Plus. So instead of paying your $185 for Home and Business, you have to pay about $585 for Standard - for each DEVICE (Not even for each user) - A $400 premium for the privilege of using the software remotely if you are not the main user, and need it to be installed on a remote host that has multiple users accessing the software.

OnLive would need to charge at least ~$585 (Just in Licensing costs, not even their own costs) PER IPAD to offer it on Microsoft's terms. It is not going to be happen, because most users will not be prepared to pay this much to make the service viable. As an idea of comparison, you could buy a PC with OEM Windows 7 Pro (Pro is licensed for Remote Access to the OS) and Office home and Business PKC to remote into yourself (As it is installed once, accessed remotely only by the primary user) for less than this.

If Microsoft had any sense they will 1) give OnLive favorable licensing terms in this instance to prevent this market from falling into the hands of their competitors and 2) fix Microsoft licensing terms of Microsoft Office for Remote Access (RDS/Citrix etc.) and Virtual Desktop (eg: VDI) users to make it so at the end of the day, it is not more expensive than the PKC/Retail product and allow per-user licensing to be used like they do with Windows

You use the word convoluted, but flexible word be more accurate.

The thing you seem to not realize is Microsoft assigns account and assistance agents to help with licensing and assistance in OEM, Partner, Development, deployment at a very hands on and direct level.

They get paid to help tiny companies and users and major corporations. The level of free assistance they give is beyond what most people would imagine, even sending agents to your site to help when it is a 20 PC company or a tiny system builder.

If you have even a free partner account, Microsoft will move mountains to help and advise on licensing all the way to server deployment and integration technologies, even when you are trying to get interoperability with non Microsoft technologies.

That is why they gave no real excuse, and anyone that finds licensing confusing are not using the free help they have available to you. I have seen issues with even home licensing that they have provided help and support for free that a Redhat server assistance paid service doesn't offer.

This is one reason business likes and uses Microsoft products.

Spot the Microsoft Employee

If they need Specialized Licensing staff to help customers to this level just so they know how much they need to pay, then it is convoluted. Other companies don't need this because their price structures are straight forward.

It is not flexible! They force you to use more expensive SKUs (Standard instead of a Home and Business) of Office in addition to the RDS CAL (which is about the same price as a Windows license anyway) which completely negates the cost savings of Remote Desktop Services (you pay more for Microsoft Office license than you save on computer hardware). Then they double-dip with either more licenses or ongoing yearly fees (SA/HUP) for the privilege for your employees to remote in from home to do some work or from their mobile device (Which you wouldn't pay extra for if it was on a standard PC). Also the disparity of licensing terms between products (eg: Office and Wndows) makes it even more confusing.

Businesses don't like Microsoft products because of licensing - they are being ripped off, they use it because it is the only real option for their work without major issues.

As soon as I heard about this at CES, I knew it was only a matter of time.

I hope they work things out. Those iPads could really use some decent productivity software.

Well OnLive can easily check Microsoft's licensing carefully first right? Office for Terminal Server especially has a special product key for use over it.

We don't even know if OnLive is a good company by practice. It could have been a group of young adults with a MSDN account for all we know.

Microsoft should be pulling the plug on OnLive's actions and pushing the use of the cloud-based versions of its Office apps.

Shiranui said,
Microsoft should be pulling the plug on OnLive's actions and pushing the use of the cloud-based versions of its Office apps.

I imagine they'll end up licensing the cloud based apps... What they're doing now Microsoft doesn't really have a pricing model for, so they're not going to invent one just for these people when they have a service available that does that...

I am a bit surprised that a high profile service would deploy this without understanding the licensing.

When you are a volume license customer, partner, or OEM; Microsoft assigns people to your account that answers and approves licensing questions, for free.

Even when you want to do something that is outside the normal usage, licensing, or want help in deploying a technology, they have people they will assign to your account that range from customer service, licensing/sales agents and even deployment consultants, which also includes developer assistance, again for free.

Microsoft has numerous and liberal licensing policies, so I understand why they might have assumed this would be ok, but still not asking seems weird.


I would bet good money they would never attempt to host OS X or iWork on Windows Servers and distribute it as a service/product to phone and PC users...

Yep, Microsoft will try to do this the right way first. If they don't get anywhere on it then it will goto the law.

So far, OnLive has yet to respond to Microsoft's blog post but we have emailed their to get a statement.

English good not. They respond to Microsoft not but you they will.*

*Written in a way the author can understand me

laserfloyd said,
If someone were doing this with an Apple product we'd hear about S.W.A.T. teams kicking in doors.

I kid, I kid!

Yeah, I know you are kidding. Apple never kick doors first. They shoot to kill and then kick doors .

mantragora said,

Yeah, I know you are kidding. Apple never kick doors first. They shoot to kill and then kick doors .

Either way, there's a lot of "door kickin'"... LOL

Seems fair enough to me, and by the sounds of it MS are going the right way about it, and not heading straight to the lawyers and suing the pants off OnLive

why not just sue the living out of them like all the other news we read here? oh wait, it's microsoft...

capr said,
why not just sue the living out of them like all the other news we read here? oh wait, it's microsoft...

+1 I appreciate that Microsoft doesn't sick the lawyers on every person they have an issue with. Licensing is much more reasonable I think.