How does Windows 7 licensing work for running the OS as Virtual Machines?

I plan on buying Windows 7 Ultimate Edition to run on an old Pentium 4. I also want to run Windows 7 virtual machines inside Windows 7. My question is two fold:

• Do I need a license for each Virtual Machine?
• Does the answer change if I use a third party virtualization platform (e.g. VirtualBox, VMWare, QEMU, etc) as opposed to VirtualPC?

Solution 1:

Check out my SuperUser Blog post on transferring a Windows licence to another machine, the same rules apply.

Basically the following two sections of your licence are relevant:

INSTALLATION AND USE RIGHTS.

One Copy per Computer. The software license is permanently assigned to the computer with which the software is distributed. That computer is the “licensed computer.”

and

ADDITIONAL LICENSING REQUIREMENTS AND/OR USE RIGHTS.

Use with Virtualization Technologies. Instead of using the software directly on the licensed computer, you may install and use the software within only one virtual (or otherwise emulated) hardware system on the licensed computer.

Effectively you can use the copy of Windows on the host or the guest machine, but not both at the same time, otherwise both copies need to be individually licenced.

In the blog post I have linked to a Microsoft site where you can find licences for all Microsoft software so you should be able to find out your rights.

Solution 2:

Found this relating to Windows Vista VM's

You may run on the licensed device at any one time one copy, or instance, of the software directly on the hardware (the physical operating system environment) and up to four instances of the software in virtual machines. You may create and store an unlimited number of copies (for example, copies in VMs) for use on any licensed device.

The actual EULA will be posted here

Found a question on serverfault that might help :

Can a Windows 7 Ultimate product key be used for virtual machines as well?

links to a post that indicates you can run 4 copies per machine.

Virtual OS Rights - Use up to four instances of Windows in virtual OS environments for each license that has active Software Assurance coverage.

Solution 3:

Sorry for the bad news but...

Yes, for each Windows 7 instance you run inside a VM, you'll need a license.

If you are running Windows 7 Professional, Enterprise or Ultimate, you get one licensed Windows XP for free with XP mode. Any other OS needs to be licensed indivudually, whether this runs on hardware or in a VM is not relevant.