Microsoft Tuesday liberalized its virtual machine policies, as expected, and said that starting September 1 its big customers will be able to move Microsoft virtualized server applications between servers “in a server farm” as often as they want without paying additional licensing fees. The company is overturning its existing customer-irritating “90-day reassignment rule” that has restricted virtualized Microsoft applications to the physical servers they were assigned, allowing them be moved only every three months.

Hardly the dynamic "move-things-around-as-workloads-demand" flexibility being preached today.

Microsoft also said that it's changing its technical support policy for 31 of its server applications so that customers can get the same level support when deploying those apps on Windows Server 2008 Hyper-V, the Hyper-V Server alone or any validated third-party virtualization platform that they get with non-virtual environments.

So far, Cisco, Citrix, Sun, Novell and Virtual Iron have lined up for Microsoft's two-month-old Server Virtualization Validation Program.

VMware is noticeably missing from the list.

Microsoft said the new licensing rules cover 41 server applications including SQL Server 2008 Enterprise Edition, Exchange Server 2007 Service Pack 1 Standard and Enterprise Editions, Dynamics CRM 4.0 Enterprise and Professional Editions, SharePoint Server 2007 and Microsoft System Center products.

The change does not apply to the Windows Server operating system, Client Access Licenses (CALs) or so-called Management Licenses.

It also applies only to licenses acquired under a Volume Licensing program not through any other retail source, cutting out the little guy.

Microsoft anticipates that the change will reduce the number of licenses needed by letting customers count licenses by server farm instead of by server.

"The software," it says, "can run in any number of physical and virtual OSEs (operating system environments) within a server farm as long as the number of physical processors being used by running instances of the software at any one time does not exceed the number of licenses assigned to servers in the server farm."

Microsoft defines a server farm as up to two data centers physically located "in a time zone that is within four hours of the local time zone of the other" or within the European Union or European Free Trade Association. It also says a data center can only be part of one server farm at a time and reassigned only every 90 days.

So that means that workloads can be shifted from coast-to-coast in the US or anywhere around the EU but not between the states and Europe or Europe and Asia.

It's unclear what kind of financial loss, if any, the changes entail. Since Microsoft is proposing that you "count the greatest number of physical processors at any time supporting running instances across your server farm, and assign that number of licenses," it could conceivably work out to boost licenses in some cases.

Microsoft, however, offers the example of three instances of SQL Server 2008 Enterprise running in three separate virtual operating system environments (OSEs) - each with two virtual processors - at the same time.

"Assume," it says, "these instances run on a server farm made up of 20 servers, each with four physical processors. If just three unique physical processors support the three running instances, then, based on the licensing changes, you need only three SQL Server 2008 Enterprise processor licenses. So you can run those three instances anywhere in your server farm. If, however, two physical processors support each of the running instances, for a total of six unique physical processors in this scenario, you would need six SQL Server 2008 Enterprise processor licenses. Without the licensing changes, you would need 80 processor licenses to support moving the instances freely in the server farm."

Either way the move, a bow to virtualization going mainstream and what the market will bear, is expected to reduce the barriers to virtualized deployments and accelerate adoption rates.