Virtualization industry observers expect Microsoft to eliminate a licensing restriction that has hampered the mobility of virtual servers, perhaps as soon as next week.

Under current Microsoft rules, software running on a virtual machine is licensed based on the physical server. This can be problematic because of technologies such as VMware's VMotion, which can move virtual machines from one physical server to another without causing downtime.

Microsoft considers a VMotion move a license transfer, and prevents customers from making such a transfer more than once every 90 days.

"You may reassign a software license, but not on a short-term basis (i.e., not within 90 days of the last assignment)," Microsoft says in a licensing policy document for Windows Server 2003.

This 90-day restriction also applies to SQL Server 2005 and Exchange Server 2007.

Click to see: A chart detailin the problem with virtual license

"Technically, the virtual machine would have to remain on the same physical machine for three months," says Burton Group analyst Chris Wolf, who has written extensively about licensing on virtual servers and urges vendors to lift such restrictions.

In an interview last month, Wolf predicted that Microsoft would respond to customer concerns and eliminate the 90-day restriction, and instead tie licenses to virtual machines rather than physical ones. "Within a few months we're going to see those changes," he said. "I believe the 90-day restriction will go away."

It could happen as soon as next Tuesday. In an interview with Network World last month, Patrick O'Rourke, group product manager at Microsoft, discussed the 90-day restriction and said Microsoft is considering licensing changes that would give customers more flexibility in reassigning virtual machines.

Just this week, a Microsoft spokesperson said the company will announce licensing changes next Tuesday.

"As server virtualization becomes more mainstream, Microsoft will be announcing new licensing and support policies to help customers make their data centers and enterprise IT more dynamic on August 19," Microsoft said.

The exact changes haven't been revealed. Lifting the 90-day restriction would give Microsoft customers an ideal set of licensing policies for virtual environments, according to a January report written by Wolf titled "Virtualization Licensing and Support Lethargy: Curing the Disease that Stalls Virtualization Adoption."