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In a Dual-Tier TFS 2008 Install, Do I Need a SQL Server License for the Application Tier?

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A customer asked me the following question a couple of days ago:

"To install SQL Reporting, you must have the SQL Engine installed on that server anyway. What are the license implications of having SQL Reporting installed on our TFS box? If that is equal to a SQL standard license, then what is advantage of using a dual tier installation profile?"

The answer is that TFS comes with a license for running SQL components for TFS on the same box. The reason you only need one SQL license in a dual-tier install is that the one that comes with TFS covers SSRS running on the application-tier machine. You just need a separate SQL license for components not running on the application tier (in this case, the SQL Engine which will run on the data tier).