(IANAL) I think they are trying to say that this license is for one server that may contain anywhere from 1 to 16 CPUs for the duration of only 1 year. So, you are allowed ONLY one server, it doesn't matter if the server has 1, 2, 4, 8, or 16 processors, and no matter your configuration, the license will expire 365 days from its install/activation (whatever you call it).
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The license is for 1 server with 16 chips upto a year?
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Yes. Up to 16 CPU's.
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Can you run it on a server with 8 chips for 2 years? 4 for 4 years?
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No. Only one year no matter your CPU count.
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is the price so high because you get microsoft patent protection now?
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Chances are that the prices are due to the fact that they offer you some sort of support package, which is not a part of (but an option for) the desktop installations.
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Why do they even limit the numbers of years, servers, and cpu's?
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Good question. I do not know for sure, but perhaps the answer is...revenue? They are offering a service that they feel is worth some form of currency.
When it comes to licensing and legal business, you can safely assume a confusing question or two.....maybe a lot of them.