With a wave of the wand, Microsoft made impressive licensing changes to Windows Server 2003 that made running virtual server instances more cost-friendly. Under the Enterprise edition of Windows Server 2003, organizations can run up to four virtual servers without incurring any additional licensing fees beyond the physical host license. Under the Data Center edition, you can run as many virtual servers as your hardware can support.

With the introduction of Windows Server 2008, Microsoft is extending this program to the Standard edition, albeit in a more limited way. With Windows Server 2008 Standard, you’ll be allowed to run your physical server as well as one virtual server on that physical host without incuring an additional charge.

As is the case with Windows Server 2003, Microsoft is not dictating the virtualization solution that you must use to take advantage of these licensing features. That said, with the Standard edition licensing change, you will need to use something like Virtual Server 2005 or VMware Server to be able to take advantage of the offer. With the Enterprise and Data Center offerings, you can take advantage of the offer as long as you apply the physical Window license to the host server.