Virtual Server 2005 & Licenses

I was reading an article today about server vitualization using Microsoft Virtual Server 2005 and it stated:

"...plus, as the company upgrades its current servers to Windows Server 2003, it will save on license fees, since it can run up to four instances of the server operating system in a virtual environment without buying an additional license."

is that true?  I get 3 extra licenses for free if I am using Virtual Server 2005?
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mgcITAsked:
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oBdAConnect With a Mentor Commented:
Sort of. The host OS has to be Server 2003 R2 Enterprise Edition(!), then you can install four guest machines with Serevr 2003 R2 (downgradeable if you're using Volume Licensing):
"Each software license allows you to run, at any one time, one instance of the server software in a physical OS environment and up to four instances of the server software in virtual OS environments on a particular server."
Details here:
Virtualization Whitepaper
http://download.microsoft.com/download/6/8/9/68964284-864d-4a6d-aed9-f2c1f8f23e14/virtualization_whitepaper.doc
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mgcITAuthor Commented:
ok so I actually get 5 OS's then.. the host plus 4 additional virtual servers?  Is that right?
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oBdACommented:
That's what the whitepaper (currently) says, yes. Note that the host has to be running R2(!) Enterprise(!), and the downgrade option is only good if using volume licensing.
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mgcITAuthor Commented:
what do you mean by downgrade option?  We are using volume licensing by the way so what does that mean for us?
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SembeeConnect With a Mentor Commented:
As far as I am aware the additional server licences are only available to volume license customers. It is one of Microsoft's incentives to get people on to the licensing schemes.
However, when I looked at it, the cost of Enterprise edition wasn't much different to that from the same number of standard edition licenses. Note that we are saying ENTERPRISE edition of Windows 2003 R2 - which is a lot more expensive than the standard edition.

Downgrade options is the ability to use a lower version of Windows than you purchased - so a Windows 2003 R2 license allows you to use Windows 2003, Windows 2000 or (!) NT4.

As always with Microsoft licensing, don't take our word for it.
Get three opinions on the licensing, make sure that one of them is from Microsoft and get it IN WRITING. If it isn't in writing then it isn't worth the words being said.

Simon.
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mgcITAuthor Commented:
Thanks for the help and clarification.
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