I see that Microsoft has released a new version of KMS:

KMS 1.1 x86: http://go.microsoft.com/fwlink/?LinkId=82964
KMS 1.1 x64: http://go.microsoft.com/fwlink/?LinkId=83041

This version has two new features: The ability to activate Windows Server 2008 (minimum 5 servers required), and the ability to be hosted on a virtual server.

Now, am I missing something here? The ability to host it on a virtual server seems ideal - no longer is it tied to a specific piece of hardware. That just seems too good to be true though... I'm wondering, what's the catch? Seems like now you could make a copy of this virtual server and have it running on multiple networks.......

Thanks for the info - I'll roll this out during spring break next week.

In a WAN environment, it's not unusual to run multiple KMS servers on multiple networks, so that would be an ideal way to deploy them without having to give your KMS key out to multiple people. I can only guess that the KMS service phones home to prevent abuse.

Maybe. But I thought that the KMS server didn't do any more communication with Microsoft after the initial activation. There might be some people out there running it on networks without Internet access.