Software colossus Microsoft is to simplify its licensing terms and is taking a lead in development cost models that account for the growing popularity of virtualisation technologies.

From 1 December 2005, Microsoft will offer an option to buy licences based on the number of virtual processors on which the customer intends to run the software.

Currently it charges users for the number of processors in a hardware server running its software.

But with virtualisation technologies gaining in popularity, traditional software licensing models can be expensive.

Virtualisation software provides a layer of abstraction between applications and servers. Traditionally it has been used in mainframe environments to allow different operating systems and applications to share the same server.

More recently it has been used to allow applications to seamlessly share a pool of computing resources – and this has meant that users were potentially paying for software instances of software, even though it was frequently unused.

Microsoft intends to offer users a better choice, said Brent Callinicos, Microsoft’s corporate vice president for worldwide licensing and pricing: “Instead of licensing every inactive or stored virtual instance of a Windows Server System product, customers can now create and store an unlimited number of instances, including those for back-up and recovery, and only pay for the maximum number of running instances at any given time.”

In delivering the new licensing options Microsoft has stolen a march on its rivals.

Microsoft will offer the option of licensing its server-based software, such as the SQL Server database, BizTalk Server, and Internet Security &Acceleration Server.