Microsoft was once an avowed opponent of network computing, thin clients or anything else that threatened to harm Windows' hegemony by putting the PC on a crash diet. Over the years, the company outlasted a number of vaunted opponents in that debate; for instance, the Oracle/Sun Microsystems-sponsored, Java-based New Internet Computer flopped earlier this decade.

Recently, Microsoft, no longer feeling threatened, has been quietly making an about-face. With its increasingly popular Terminal Services software, which lets users access applications running on corporate servers; its detente with vendors such as Ardence Inc. and ClearCube Technology Inc. that develop products to stream software, including Windows, to end users; and even the rollout of consumer Web initiatives such as Windows Live and Office Live, Microsoft has shown its willingness to cautiously embrace thin-client computing -- provided it is on its own, Windows-centric terms.

On Monday, Microsoft brought its affair with thin clients into the open, announcing two major licensing changes. One officially gives companies the free right to stream Windows Vista from servers down to users running thin-client hardware -- PCs lacking hard drives, though Microsoft refers to them with the semi-castrating term, "diskless PCs."

The second change is a new subscription license called Windows Vista Enterprise Centralized Desktops (VECD), which allows companies to host Windows Vista or applications in virtual machines on centrally-managed servers that can be streamed out to end users' PCs, including diskless ones.

VECD requires an annual, per-device fee that Microsoft says varies on whether companies are using PCs or thin clients, but which the company otherwise declined to disclose.

Though companies such as Ardence have also been offering streaming Windows for several years, "there was no licensing explicitly created by Microsoft to enable those scenarios," according to Scott Woodgate, director in the Windows Business Group. To be legal, Woodgate said, companies would have needed to buy full retail licenses of Windows for "every virtual machine or disk image" hosted on their servers.

The new licenses are meant to make deploying streaming and/or virtualized infrastructures easier and give "early adopters that want more flexibility to try out new architectures," said Woodgate. The licenses are available only to large corporations paying for Software Assurance contracts with Microsoft.

Companies paying for the SA maintenance contract typically pay an additional 100% of the cost of their software licenses divided over three years. In return, they are eligible for a number of benefits, though the chief one in most customers' eyes remains the right to the next major software release. That lost some of its allure in the last several years, as Microsoft failed to release several key product upgrades, including Windows Vista and SQL Server, within three years.

Small to midsize businesses can continue to purchase the retail licenses, Woodgate said.

Analyst Brian Madden, said that Microsoft's new licenses are an improvement in some respects.

"This was a modernization of the license agreements so that what used to be a 'don't ask, don't tell' situation is now officially allowed," he said. But as with Microsoft's release last summer of Windows Fundamentals, which let SA subscribers convert aging PCs into thin clients that get older operating systems streamed to them from a central server, Madden sees an ulterior motive.

"The reason they offer Windows Fundamentals is not because Microsoft wants to be your friend; it's because they want to get you to upgrade [to Vista] and sign up for SA," he said.