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Hardware vs software license keys in a VM environment

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linux-howto

http://serverfault.com – I am working with a vendor who is supplying a server-based application which requires licensing for activation. There are two options, software-based licensing and hardware (USB-dongle) based activation. What are the pros and cons to using hardware or software license keys in an environment where the application software is running on a VMware based server? The USB hardware license key will be plugged into one of these: https://www.digi.com/products/usb/anywhereusb (HowTos)