Microsoft Windows Server 2012 and licensing. Positive changes or a tightening of the screws?

With Microsoft's announcement of Windows Server 2012 versions, licensing, and pricing, I thought it would be a good idea to take a look at what a typical environment might look like

The information in this article is probably incorrect. There is a follow up article that you should read, titled Microsoft's mixed message on Windows Server 2012 Licensing: What's the real story?

With Microsoft's announcement of Windows Server 2012 versions, licensing, and pricing, I thought it would be a good idea to take a look at what a typical environment might look like. We talked about this a bit on Brian and Gabe Live this week, but we haven't written about it or flushed out any thoughts.

News broke last week courtesy of Mary Jo Foley (who, inexplicably, does not have a Wikipedia page) that there will be four editions of Windows Server 2012. Two of those editions, Essentials and Foundation, don't allow you to virtualize anything, so we're really down to two usable versions of Windows Server 2012: Datacenter and Standard. It's interesting to note that there are no Enterprise or Web versions anymore, but it's clear that the world has moved almost entirely to virtualization and that there's no need to base server editions on their applications.

Instead, both Standard and Datacenter are licensed based on the processors (plus user CALs, but that's not new), with each license granting you the ability to run Windows on two processors. If you have a machine with four processors, you need two licenses. They also both have the exact same functionality, which is a departure from past models where Datacenter had more high availability features, caching, ADFS, multiple DFS roots, and other entitlements.

In fact, the only difference between the Standard and Datacenter versions of Windows Server 2012 is that with Standard you are only allowed to run two virtual machines in addition to the host OS, whereas with Datacenter you are entitled to run as many as you want. All of this can be found in the Windows Server 2012 Licensing & Pricing FAQ, published by Microsoft, the good people that keep changing the rules…

…and the prices. Datacenter retails for $4809, while Standard retails for $882.

The question that remains to be answered, though, is who benefits from this change? 

Actually, that answer is easy. Microsoft does. The REAL question is "Is there any way that we benefit from this?"

One thing to keep in mind is that when we talk about VMs, we're not necessarily talking about using Hyper-V. Windows Server 2012 licenses are assigned to physical hosts no matter what hypervisor is used. From Microsoft's standpoint, this is brilliant. It means that no matter what, you have to buy Windows for a specific piece of hardware, which then entitles you to use Hyper-V. If you want to use ESX, that's fine, but then you're buying (or not), the vSphere license, too. It's almost like they're banking on people being lazy and saying "Eh, what the hell. Let's give it a shot."

So, regardless of the hypervisor used, you are still purchasing Windows for the physical server. That means if you have a two processor ESX box, you need to buy one license of either Standard or Datacenter. If you buy Standard, you are entitled to run two VMs on that piece of hardware. If you buy Datacenter, you can run as many VMs as you want (which, of course, is limited since you only have two processors).

What follows is the incorrect information. The above information is correct. Please refer to Microsoft's mixed message on Windows Server 2012 Licensing: What's the real story? for how this relates to VDI desktops. The bottom line is that if you are running VDI workloads, there is no limit to the number of VMs. The limit only applies to Server VMs. For VDI, there's no reason to use Datacenter since they are functionally identical.

So does this help at all? It depends on your environment and what kind of VM density you get on hardware. If you can fit 50 VDI VMs on a dual processor machine with 12 cores, you'll have to spend close to $5000 on the Datacenter edition, but you'll be able to boil that cost down to around $100 per VM. That doesn't count the cost of Windows 7/8, of course (I can hear my mom right now saying: "That's how they get ya!"). It's up to you to weigh out whether vSphere is better for you with their (also complex) licensing. 

Perhaps there's a use case for using the Standard edition with RDSH. In that scenario you can create two RDSH virtual machines on a single, relatively inexpensive server, and have the per-OS cost around $450. You can still fit several hundred users on that machine, though, which means your cost per user remains ridiculously low (score one for plain old Terminal Server!). If you choose to run on vSphere, that cost goes up because you have to add in the vSphere licensing, but it's still much cheaper than VDI.

As time goes by and the number of VMs we can fit on to a single physical CPU goes up (either by more powerful cores or more cores per processor), this can be increasingly beneficial to us. It could be right now if you use Hyper-V (ah ha!). What will be interesting, as with all licensing changes, is what happens when people plug these numbers into their company's licensing cost models. If you've already done so or care to share your thoughts, let us know in the comments. 

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Talking with Microsoft folks this week, those I talked to seemed to believe that RDS with the "User Desktop Experience" feature enabled, it the right solution for most customers.  While this may be a convient excuse for making it hard to do VDI - I really can't say that I argue with them on a technical basis.  It's just that everyone thinks they need VDI (egad, they are only customers;  they can't be right).


I agree wholeheartedly! With the broker changes in Server 2012, it's hard to say that MS doesn't like VDI anymore.

I also think that this further cements the fact that, despite the cost of doing VDI getting cheaper, the cost of doing RDS is still significantly less. The price for both goes down, but the gap between them doesn't change.


Well, this changes things.  Does this mean for smaller environments that only needed say 3 virtual servers they will have to go datacenter?  Previously those environments would purchase 3 standard 2008 R2 licenses and be covered.

I do like that the base per processor license was upped from 1 to 2.  That will make it easier to explain datacenter costs for environments.


I am very interested to see how if there are additional constraints to the Standard license. Mobility, memory caps, clustering (does anyone use MS clustering anymore) oh yeah HyperV...


There are no other constraints to Standard licenses. The Standard edition is feature-identical to Datacenter. The only difference is the number of VMs that you can run.

As for those smaller environments that only need 3 VMs, you're in this weird purgatory where you have to choose between Datacenter or multiple Standard. The crappy part is that this is the case no matter what platform your virtualize on, since the Windows license is tied to the hardware. So even if you're using ESX, you're still stuck in purgatory.


Will you be able to stack multiple standards tied to the same processors?  Or are they going to not license allow that.


Question on: "...That doesn't count the cost of Windows 7/8, of course"

Assuming you mean running Windows 2012 Server as the VDI Client VM OS,,, Where is the Win7/8 license ?  Wouldn't it be an RDS CAL for the BYOD-PC/ThinClient/ZeroClient/etc. ?


Found it in a QA doc from MS.

How do I determine which Windows Server 2012 edition is right for me?

Since there is feature parity between Windows Server 2012 Standard and Datacenter editions, your decision will be based solely on your virtualization strategy as virtualization rights become the only differentiator between editions. If your strategy calls for a highly virtualized environment, Datacenter edition will provide you with optimum flexibility since it allows for unlimited virtualization. If you do not plan on a highly virtualized environment at this time, Standard edition is the right product for your needs. If you purchase Standard edition today but find that you need more capacity in the future you will have two options to expand the virtualization capacity of your licensed server:

1. Purchase additional Standard edition licenses and assign them to the same physical server giving you the rights to run additional instances of Windows Server, or

2. If you have Software Assurance on your Standard license you can purchase a Software Assurance Step-Up and migrate to a Datacenter edition license on that server

If you are running a highly virtualized environment, management may also be a need for you. You should consider purchasing System Center 2012 with Windows Server 2012 together in the Core Infrastructure Suite, which is available inside or outside of an Enrollment for Core Infrastructure (ECI) agreement.



You're right, that's confusing. Two separate thoughts blended together into one confusing statement. Ironically, I sometimes wonder if that's how all MS licensing works :)


Actually, I forgot I already cleared that up. What I mean there is that if you're using Hyper-V as the VDI host, you'll need to use Datacenter Edition for VDI workloads. So, if you divide the cost of Datacenter out over, in this example, 50 VMs, you're looking at $100/VM before you figure in guest OS licensing.

That number is a moving target, just there as an example.

The second scenario after that deals with TS, which is where the Win7/8 license is out of the picture and we're just dealing with RDS CALs.


Thanks Gabe - I get it now.

I realize this scenario is like the movie Inception, but what if your 50 VDI VM's are Windows 2012 Datacenter edition?

Is that (50) x $4809


$4809 / (50) ?


Ahh ok - in that case, since the license is explicitly for physical processors, the $4809 that you pay for the Datacenter license allows you to run unlimited (constrained by hardware, not licensing) Windows 2012 Datacenter VMs. So, $4809/50 in this example.

In that situation, there can be a distinct advantage, but it depends how many server workloads you can cram on a box. I guarantee we'll see people cramming as much as they can on each piece of hardware, though :)

Kind of an interesting twist, eh?

The thing is, this doesn't require Hyper-V, so even if you have ESX or XenServer, you're still licensing the physical server and your VM entitlement doesn't change.


I am very thankful that it remains per Processor and not per Core (as SQL 2012 has done).


Is there any catch to using 2012 Standard or Datacenter as a gust OS like how Microsoft has with Windows 7 editions?


Hi all, I've been having a discussion with Gabe over email about this and finally thought it time to put a comment here to. Clarify the licensing terms of Windows Server editions. There are links to documentation for this at the bottom of my post. 

First and foremost, every edition of Windows current and planned which supports Hyper-v allows you to run unlimited virtual machines of any type. The article and some comments imply that there is a limit on this, and that is not the case. As long as you have a licence for all virtual machines the only limit on the number you can run is that of the hardware. 

All Microsoft licensing is tied to hardware. This means that each host must be licenced to run the guests running on it and licences do not move when you live migrate. 

In terms of licensing there are two types of machine, POSE and VOSE. POSE is short Physical Operating System Environment and every server licence gives you the rights to run one and only one of these. This is the host, so for Hyper-v you will have one POSE for VMware you will have none regardless of how many Windows licences the host has. VOSE is short for Virtual Operating System Environment and is a running instance of the OS loaded into memory. You may have as many offline installed images as you like but you need one VOSE entitlement for each one running. Again these entitlements do not move with live migration or vmotion so every host needs enough VOSE entitlements to run the maximum number of guests it will ever run. 


Windows Server Standard (per host) allows 1 POSE + 1 VOSE

Windows Server Enterprise (per host) allows 1 POSE + 4 VOSE

Windows Server Datacenter (Per Socket) allows 1 POSE + unlimited VOSE 


Windows Server Standard (per pair of sockets) allows 1 POSE + 2 VOSE

Windows Server Datacenter (per pair of sockets) allows 1 POSE + unlimited VOSE

All entitlements are cumulative, so a machine with 2 Standard 2012 licenses will allow 4 VOSE even if the machine only has 2 sockets. 

Editions allow downgrade rights on VOSE instances, so 2012 Datacenter allows the use of 2012 Standard or 2008 Enterprise. 

Entitlements are for the same product as the licence or a downgrade, Server licences are separate from desktop licences and therefore if you plan to run Windows 7/8 in a virtual environment that is licences separately and is not related to the virtual usage rights. 

2008 document

2012 document

Definitions document


While we had this discussion in email, I'm adding it here for completeness.

In addition to Stucco's reference to the FAQ (linked in the article), Question 2 in the same FAQ also registers for me:


Q2.  What is the difference between Windows Server 2012 Standard edition and Windows Server 2012 Datacenter edition?

Both Standard and Datacenter editions provide the same set of features; the only thing that differentiates the editions is the number of Virtual Machines (VMs). A standard edition license will entitle you to run up to two VMs on up to two processors (subject to the VM use rights outlined in the Product Use Rights document). A Datacenter edition license will entitle you to run an unlimited number of VMs on up to two processors.


Between those two things, and every other document that I've read regarding this announcement, I'm holding fast to my viewpoint that the licensing for Server 2012 is based on virtual machines alone, and not the OS inside those VMs as the VOSE model would have you do.

Also, we asked Microsoft via live chat on the Server 2012 home page about which edition we need to support a VDI workload. We even explained that it was Windows 7 desktops, and that it was more than two per host. The answer directly from MS was that we'd need to have Datacenter.

Of course, this could be a case of "Ask 10 Microsoft people about licensing and get 11 different answers," but all the evidence right now points to what I wrote in the article. I'd be happy to change things should evidence to the contrary come out. Right now, though, I'm not inclined to lean on documentation from Server 2008 R2 even if the terminology is similar. Server 2012 is a large enough departure in terms of philosophy and licensing that it would make sense for MS to change up the licensing.


There's no doubt that document implies that it's the number of VMs in many of the questions. I am forwarding the links to both documents to our contact at Microsoft to clarify as I am sure the intention of the licensing is to remain as it was in 2008 where unlimited VMs could be run in any edition and only the licenced OSEs were affected.

I'll report back when I get confirmation.





Dave (lustyd) is correct.  Server 2012 Standard does not limit the total number of VMs, it simply limits the total number of instances of Server 2012 Standard running in VMs that are included with each license.

I can see why the wording of the FAQ confused you on this point, however, if you read the entire document and consider it all in context you will agree with what I am saying.  Example: there is another question in the FAQ that mentions if you purchase additional 2012 Standard licenses you will have the right to run additional instances of Windows Server on the same box, not that you will have the right to run more total VMs, regardless of the OS running within.

Remember also that you do not need to purchase anything to run VMs on Hyper-V.  Hyper-V Server 2012 will be *free* just like Hyper-V Server 2008 R2 is now and it will allow you to run a ton of VMs on a single box.  You will need to properly license the operating systems that will run within the VMs as expected.

I think Hyper-V Server 2012 will be a great free choice when you consider how much ram, vCPUs, etc. are supported and overall feature set compared to other hypervisors.


Hi all, I have received confirmation from Microsoft that there is definitely no limit on the number of VMs any edition of Hyper-V will run. The document should have said OSE in most of the places where it says VM.

The question you need to ask to get the correct answer consistently from Microsoft is whether there is a limit to the number of Linux VMs which can be run on Standard. The answer to this will always be no, thus confirming the lack of limitations. This then leads the person you are asking to confirm that the licence is refering to 2 OSEs rather than 2 VMs running on the host. Obviously you don't need to run Linux, this is just a good trick to get them thinking in the right context for the question about the licensing :)

As I said previously, Windows desktop editions are separately licenced and are neither included nor related to virtualisation rights on Server products.




That's the exact question we asked MS in our chat. This is a cut & paste of that part:

[Brian & Gabe]: Like, can I run as many Linux VMs as I want on Windows 2012 Standard edition?

[MS Representative]: Correct. The VM's can run any server or desktop OS. You will still only have two virtual instances available with Standard when this software is released.

[Brian & Gabe]: so to be clear, the two VM limit of standard applies to ANY OS, not just Windows Server?

[MS Representative]: Correct.

I'm writing an article now that will hopefully prompt MS to get to the bottom of this.

Thanks for doing all the legwork on your side, too.