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Windows-on-iPad service goes legit as Microsoft licensing demands are met

OnLive's hosted Windows and Microsoft Office service for tablets has gone …

A hosted Windows and Microsoft Office service for the iPad and Android tablets that violated Microsoft's software licensing rules has apparently gone legitimate, with a new structure that complies with Microsoft guidelines for providing virtual desktops.

As we reported a month ago, the gaming company OnLive has been providing a virtualized instance of Windows 7, complete with Microsoft Office 2010, without properly licensing the service. The service is available to any user for free, with the option for a a $5-per-month paid upgrade, a pricing scheme that had virtual desktop competitors crying foul. The competitors said it's impossible to offer a properly licensed virtual desktop service at such low prices without taking a loss.

Microsoft publicly confirmed that OnLive wasn't properly licensed, saying it was talking to OnLive to bring the service into compliance. Brian Madden, a technologist and blogger about virtual desktops, reported today that OnLive has made the necessary switch. Instead of offering a hosted Windows 7 instance, OnLive apparently now offers one based on Windows Server 2008 R2. Under Microsoft licensing rules, hosted virtual instances of Windows 7 cannot be provided unless each user has a license from Microsoft, and Office can't be provided as a service at all except when it's hosted on Windows Server and Remote Desktop Services.

"Windows Server 2008 R2 and Windows 7 are fundamentally the same OS anyway, and it's possible to configure the Windows Server desktop to look and feel like a Windows 7 desktop," Madden wrote. "I would assume that OnLive didn't change their fundamental architecture at all—they just dropped the server bits instead of the desktop bits and all is now well."

It's unclear whether OnLive will have to raise its prices as a result. Madden notes that OnLive CEO Steve Perlman (a former Microsoft division president who sold one of his previous startups to Microsoft) has close ties to Redmond. "Microsoft is known to cut special deals with companies for licensing, so it's possible that no additional money changed hands with OnLive," Madden wrote. "Microsoft might have just said, 'Look, just change it to Server and we'll leave you alone.'"

We've contacted both Microsoft and OnLive and will provide further details if and when we get them. OnLive Desktop can still be downloaded from both the iPad App Store and Google Play. OnLive now bills it as a "PC desktop" rather than a Windows 7 one.

The possibility that OnLive was getting preferential treatment from Microsoft angered Guise Bule, CEO of tuCloud, so much that he's formed a new company with the express purpose of offering a service that's almost identical to OnLive's, complete with license violations. Bule told Ars today that he is still "proceeding as planned."

UPDATE: OnLive declined our request to comment on licensing questions.

UPDATE 2: Microsoft has now released a statement to Ars, indicating that OnLive did tell Microsoft of its new Windows Server-based setup. However, it will take some time for Microsoft to inspect the service and ensure that it meets all licensing requirements. "We’re pleased to have been told that the OnLive Desktop application is now accessing our software by hosting it on Windows Server, an important step in delivering any Microsoft-licensed desktop-like service to the public," Microsoft said. "Based on this information, we will work with OnLive to take a closer look at its service and ensure it is operating according to its license like thousands of other partners and utilizing our standing pricing and licensing terms."

Channel Ars Technica