Licensing Woes and Confusion

"You may install the SOFTWARE PRODUCT on a single computer ("Workstation Computer") for use as interactive workstation software, but not as server software. However, you may permit a maximum of ten (10) computers to connect to the Workstation Computer to access and use services of the SOFTWARE PRODUCT, such as file and print services and peer web services."

--Microsoft's license agreement
for Windows NT Workstation

Just behind the front lines of the Web browser war, a Web server battle has been raging between O'Reilly & Associates and Microsoft. Caught in the firing line is Windows NT Workstation (NTW) 4.0, exposing its license and technology to public scrutiny.

Round 1
Microsoft offers its Internet Information Server (IIS) for "free" with Windows NT Server (NTS), but limits IIS to running on NTS. Other Web server vendors respond by selling their Web servers on NTW so that the combined price of their solution is lower than NTS with IIS.

During the NTW 4.0 beta cycle, Microsoft adds some code that enforces a 10-connection limit by restricting the total number of TCP/IP connections possible in a 10-minute period. This restriction causes Web servers that run on NTW to fail and outrages the user community. After a few tense weeks and calls from its largest customers, Microsoft backs down, removing the hard limit from the released product.

Round 2
The user community celebrates its victory for a few weeks, only to discover that Microsoft has changed the license agreement for the final product. The NTW 4.0 license agreement reads as you see quoted at the head of this article.

In this round, several vendors interpret "...not as server software" to be anti-competitive because it prevents them from running their software on NTW. Microsoft responds by giving a 50% discount to upgrade to NTS. In addition, Microsoft claims that NTW and NTS are technically different products and that running a Web server on NTS significantly improves performance over running on NTW.

The term technically different prompts O'Reilly to investigate just how alike NTW and NTS are. The company works with Dr. Mark Russinovich to document any differences. He finds that, at core, NTW and NTS are the same product but tuned differently (for details, see Russinovich's article, "Inside the Difference Between Windows NT Workstation and Windows NT Server," page 101).

In response, at www.microsoft.com/ntworkstation/ntwvnts.htm, Microsoft acknowledges the similarities but points out that NTS comes with additional software and client licenses.

Round 3
Some IS users believe that they are violating the new license: Establishing connections to more than 10 computers simply happens too easily. For example, suppose your NT workstation is connected to five computers for files and two computers for printers, you let three people connect to your workstation, and it runs a Simple Mail Transfer Protocol (SMTP) service that receives email--you're over the limit.

Meanwhile, Windows 95 has no such limits. This interesting oversight means that in the process of restricting NTW, Microsoft has made Win95 legally more powerful than NT. So is Win95 the best choice for small Web servers? Technically, no. Legally, yes.

There's a Pony in This Pile
The hard limit on connections was a disaster. First, it caused a public-relations firestorm. Second, the limit focused users on connections instead of computers.

Let me clarify. After several conversations with Microsoft, I've learned that up to 10 simultaneous inbound computers can access the services on NTW, and each of these 10 computers can have as many connections as necessary. I conclude that there is no limit on connections and you can run whatever you want on NTW, including a Web server!

The catch is that until Microsoft provides a way to monitor the number of inbound computers, users will have to devise their own methods of compliance. If you buy NTW as a way to serve unlimited users, you're out of luck.

Round 4?
Most NTW 4.0 users can live comfortably within the new license restrictions. However, some of Microsoft's largest customers have configurations that violate the agreement. Microsoft has agreed to work with International Data Corporation (IDC) and Windows NT Magazine to investigate the current use of NTW. If you believe your ordinary use of NTW will violate the license, please email me. I'll keep you posted as this story unfolds.

End of Article

I just read Mark Smith’s November editorial about NTW 4.0 licensing. Very interesting. Is it your understanding that computers connecting to NTW via Telnet constitute a connection? If we have 20 users Telnetted into our NTW machine, are we violating licensing? 
—Jim Adamson, 

 Jim, my understanding is that your situation violates the letter of the law (license agreement) but not its spirit. This problem is one only a lawyer could love. 
--Mark Smith

Jim Adamson August 12, 1999

Great editorial on NT 4.0 and the licensing debacle, but what’s the right answer? I came away still convinced that this question is one of interpretation. For this reason, our company has taken a position of not upgrading to NT 4.0. I’ve talked with O’Reilly & Associates and Microsoft, and clearly both parties and all points in between are frustrated and confused.
I believe that Microsoft has done itself a serious disservice. The user community (a.k.a. the marketplace) is raising many questions. What happens when NT 5.0 rolls out? More licensing upcharges? More “virtual” restrictions? Will Microsoft continue to waffle when pressed on policy and licensing issues? Just a few thoughts from a happy NT 3.51 user. 
--Mike Brown

Mike Brown August 12, 1999

I thought Mark Smith’s editorial was well done and to the point. One important piece of information, however, seems to be missing from every discussion of the recent licensing disputes.
The NTW 3.51 license agreement says, “If you use the SOFTWARE as a server to access services of the computer on which the SOFTWARE is installed, a maximum of ten (10) inbound peer connections can simultaneously access and use such services.” It plainly states that NTW 3.51 is licensed for a maximum of 10 connections. Everyone seems to think the 10-connection license is new with NT 4. Locking the beta 2 product was new. Any software manufacturer that had developed a Web server for NTW, for example, violated the existing license agreement as early as NT 3.1.
I am amazed that Microsoft did not hard-lock NTW 3.5x during the onset of the recent Internet explosion. Most Web server software developers developing for NTW plainly contributed to violation of the NTW license agreement from day one, committing nothing less than licensing abuse.
For a long time, NTW has had a license agreement explicitly stating a 10-connection limit. Why then, when MS finally decides to enforce the license agreement limit, does the industry that has been violating the agreement complain so loudly? Now everyone wants to argue over SMB vs. IP connections. Where does the complaining end? 
--Joel Millecan

Joel Millecan August 12, 1999

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