Microsoft has released a white paper clarifying how licensing for its current version of Windows Server works when paired with virtualisation software.

However, customers might face a whole new set of licensing rules once the next version, Windows Server 2008, is released later this year.

In a white paper called "Licensing Microsoft Windows Server 2003 R2 to Run with Virtualization Technologies," Microsoft outlines clearly how to license the current version of Windows Server - Windows Server 2003 R2 - for specific third-party virtualisation technology, including VMware ESX, VMware Vmotion and SWsoft Virtuozzo. It also explains licensing for Microsoft's own System Center Virtual Machine Manager.

The document can be found on a web page that also includes previously released virtualisation calculators that help customers determine the cost of Windows Server licensing in various virtualisation scenarios.

Virtualisation has complicated server OS pricing because it allows more than one instance of server software to run on a single server, while traditional OS pricing has been per server, assuming that only one version of an OS can run on one piece of hardware. Virtualisation allows software to be emulated via a virtual machine, and so run without having to be physically installed.

But even if Microsoft has done enough to clarify how its current version of Windows Server should be licensed for virtualisation scenarios, customers could find themselves needing new guidelines once Windows Server 2008 is released, something Microsoft expects to do by the end of the year. Formerly code-named Longhorn, the next version of Windows Server will eventually have virtualisation software built-in (which could preclude the need for third-party virtualisation software), however Microsoft has announced that the virtualisation technology, code-named Viridian won't be available until six months after Windows Server's release.

"We believe most customers will choose to use Windows Server virtualisation, which comes as a role within Windows Server 2008," said Microsoft spokesman Patrick O'Rourke. "But customers still have the option to use third-party server virtualisation software on Windows Server 2008."

Pricing for Windows Server 2008 has not yet been announced.

According to the Microsoft white paper, current virtualisation pricing for Windows Server 2003 R2 is as follows: Windows Server 2003 R2 Standard Edition (SE) allows a customer to run only one instance of the software in either a physical or virtual way on a server. Users need to assign an SE license for each running instance of Windows Server on a system.

Customers have more flexibility with the enterprise and data centre editions of Windows Server 2003, however. They can run one physical instance of Windows Server and up to four simultaneous virtual instances with one Windows Server 2003 R2 Enterprise Edition license, and can run unlimited physical or virtual versions of the software when Windows Server 2003 R2 Datacenter Edition is licensed for every physical processor in a server.

Windows Server 2008 is currently available in a beta 3 version.