Parallels is alerting its customers that, with the introduction of Vista, Microsoft has complicated things substantially in the Vista End User License Agreement (EULA) regarding the virtualization environment. In a communication with TMO on Wednesday, Ben Rudolph, the Parallels Marketing Manager pointed out that Microsoft has set some "very specific, and restrictive, guidelines on when and how Vista can be run in a virtual machine."

Parallels Desktop is the #2 selling software for Macs (behind Microsoft Office). It allows Macintosh users to run Mac OS X and Windows side-by-side using virtualization technology.

The crux of the matter is that the least expensive versions of Vista, the Home Basic and Home Premium are not licensed for use in a virtualization environment. This will force customers who want to run Vista within Parallels into, at least, the Business version of Vista which retails for $299.

It gets worse. The Vista EULA goes on to say:

"USE WITH VIRTUALIZATION TECHNOLOGIES. You may use the software installed on the licensed device within a virtual (or otherwise emulated) hardware system on the licensed device. If you do so, you may not play or access content or use applications protected by any Microsoft digital, information or enterprise rights management technology or other Microsoft rights management services or use BitLocker. We advise against playing or accessing content or using applications protected by other digital, information or enterprise rights management technology or other rights management services or using full volume disk drive encryption."

This would appear to preclude the use of Vista for things like watching DRMid video content including the new Netflix service. But the dust has not settled and the complete EULA interpretation will become clearer in time.

Parallels has posted additional coverage on the issue at their Website.

In a related story at OSNews on Tuesday, it was pointed out that when customers upgrade from XP to Vista, their XP license is voided. Those who looked at the EULA concluded, "What this means, basically, is that after youive upgraded your XP install to Vista, you cannot use the license of your old XP install on another computer."

One way to deal with the first issue above is to utilize Appleis Boot Camp and bypass the restrictions in the Vista EULA regarding virtualization. But many customers who are enthusiastic about running Mac OS X and Vista apps side-by-side, especially with the Parallels "Coherence" feature wonit like that alternative.