Microsoft has Made Hosting VDI Less Expensive with Windows Server 2012

Bottom Line: If Hyper-v is being considered as an option to host VDI desktops, consider utilizing Windows Server 2012 Standard edition and buying Windows Server 2008 R2 with Software Assurance before the release of Windows Server 2012. 

With the upcoming Introduction of Windows Server 2012 (September 4, 2012), Microsoft has reduced the number of server software editions that offer hypervisors (Hyper-v) to two: Standard and Datacenter editions.  Microsoft has also modified the licensing of the software by making both server editions processor based licenses.  Windows Server 2012 Standard’s functionality has been elevated to match the Datacenter edition by providing parity between the two editions with the exception of virtualization rights and licensing cost.  A Standard license permits up to two server virtual machines to operate on two processors of a server, while the Datacenter license allows the utilization of two processors by an unlimited number of server virtual machines running on a server.  Though the Datacenter edition permits unlimited server virtualization, the functional parity between the Datacenter edition and Standard edition allow the Windows Server 2012 Standard edition to host virtual desktops for one fifth the cost of Datacenter edition.  Through these modifications, Microsoft has made the hosting of the Virtual Desktop Infrastructure (VDI) desktops utilizing Hyper-v less expensive and more competitive with other competing VDI solutions.  This post will explore these changes and discuss why these changes have made VDI desktops hosted on Hyper-v, more affordable.   

Hosting VDI under Windows Server 2008 R2

Microsoft commercially markets Hyper-v as one of the roles within the Windows Server operating system and may be used to host server or desktop virtual machines.  Since the release of Windows Server 2008 R2 edition, Microsoft increased the functionality of Hyper-v to provide the capability of hosting VDI desktops.  VDI was possible on three editions of Windows Server 2008 R2; Standard, Enterprise, Datacenter. Though VDI was possible with the least expensive server licensing option, Windows Server 2008 R2 Standard edition, it programmatically constrained memory usage to 32 gigabytes.  This memory constraint reduced the Standard edition’s performance ability to everything beyond the implementation of a small number of desktops.  The Enterprise and Datacenter editions, on the other hand, were capable of managing up to two terabytes of memory, which provided a platform for a large scale deployment of VDI. 

Hosting VDI with Windows Server 2012

After the release of Windows Server 2012, Microsoft will be marketing only two server editions with Hyper-v, the Standard and Datacenter editions.   Because the past technical constraints that have kept the Standard edition from being considered for a VDI roll-out are no longer an issue, both of these editions will be considered viable VDI host options.  The Datacenter and Standard editions of Windows Server 2012 are both processor based licenses with a license from either edition covering two physical processors on the assigned server.  There are two major differences between the two editions; the first difference is in how many virtual server instances may exist on a server licensed under the two editions.  A Windows Server 2012 Standard edition license provides the right to execute two virtual server machines with two processors.  The Windows Server 2012 Datacenter edition license entitles the owner to run an unlimited number of server virtual machines with two processors.  The second significant difference is in the cost of licensing each processor on a server.  A Windows Server 2012 Standard license will cost $882 (retail) or each processor may be licensed for $441.  The Datacenter license will cost $4410 or $2205 per processor meaning that it will cost five times the amount to license a processor using Datacenter than it does if a Standard edition license is used.  Assuming that Microsoft does not add any licensing restrictions to using the Windows Server 2012 Standard edition hypervisor for VDI, the cost of hosting VDI desktops on the Windows Server Standard edition will be one fifth the cost of the Datacenter option.  Though there are other components required for a Microsoft VDI solution, this reduction in cost makes the Microsoft VDI option more competitive with other VDI providers.  

Windows Server 2012 Hyper-v licensing cost per Virtual Desktop Chart

The following chart provides an analysis of the cost per virtual desktop assuming that six virtual desktops may be active on one processor core.  Within the chart, three examples of the Hyper-v software licensing costs are provided. The first example is entitled “Windows Server 2008 R2 Standard with Software Assurance Upgraded to Windows Server 2012 Standard” and includes the virtual desktop costs assuming that the Software Assurance license grant for Windows Server 2008 R2 Standard on four processor servers has been enacted (this was discussed in the blog posted on August 16, 2012).  The second option provides the cost for Windows Server 2012 Standard purchased after the September 4, 2012 release and the third option provides cost information for VDI running on Hyper-v licensed through Windows Server 2012 Datacenter. Within each example there are the following four rows of information:

·         Licensing costs per server

·         Cores per server

·         Virtual Desktops executing per server (Assuming six desktops per core)

·         Cost per Virtual Desktop (Not accounting for high availability)

Each of the three examples has cost information for a two processor server and a four processor server as denoted by the labels on the first row of the chart.  Under the two and four processor server labels in the first row are four columns which provide cost for processors with either four, six, eight, or ten cores per processor. 

		Two Processor Licensed Server				Four Processors Licensed Server
Hypervisor Licensing options		Four cores per procsr	Six cores per procsr	Eight cores per procsr	Ten cores per procsr	Four cores per procsr	Six cores per procsr	Eight cores per procsr	Ten cores per procsr
1. Windows server 2008 R2 Standard with Software Assurance Upgraded to Windows Server 2012 Standard - Lowest cost option per Virtual Desktop	Licensing costs per server	$726.00				$726.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Costs per Virtual Desktop not accounting for high availability	$15.13	$10.08	$7.56	$6.05	$7.56	$5.04	$3.78	$3.03
2. Windows Server 2012 Standard purchased after the September 4th release	Licensing costs per server	$882.00				$1,764.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Cost per Virtual Desktop not accounting for high availability	$18.38	$12.25	$9.19	$7.35	$18.38	$12.25	$9.19	$7.35
3. Windows Server 2012 Datacenter	Licensing costs per server	$4,810.00				$9,620.00
	Cores per server	8	12	16	20	16	24	32	40
	Virtual Desktops  executing per server assuming six desktops per core	48	72	96	120	96	144	192	240
	Cost per Virtual Desktop not accounting for high availability	$100.21	$66.81	$50.10	$40.08	$100.21	$66.81	$50.10	$40.08

Interpreting the Chart

 The third option in the chart demonstrates that virtual desktops on the Windows Server 2012 Datacenter edition are significantly more expensive than either of the first two options which utilize the Windows Server 2012 Standard edition.  Unless there is licensing restriction announced with the release of Windows Server 2012 Standard edition, constraining VDI virtualization, the use of Datacenter should be avoided.  Assuming the Datacenter option should be avoided for hosting VDI desktops, attention should be given to the use of Windows Server 2012 Standard edition (options one and two in the chart).  The major difference between option one and option two is that the Windows Server Standard license costs will increase by more than an additional twenty one percent with the introduction of the Windows Server 2012, as reflected in option two.  With the pending price increase for Windows Server Standard edition, if Hyper-v is being considered as a VDI hosting option, the better cost option is to purchase Windows Server 2008 R2 licenses with Software Assurance(option one) and then host VDI desktops on Windows Server 2012 Standard.  The first option from the chart will also further provide the owner of a Windows Server 2012 license assigned to a four processor server with the option to execute a server self-inventory in order to qualify for an additional Windows Server License.  The additional license gained will further reduce the hypervisor licensing cost for hosting a VDI desktop, as demonstrated in the chart, with costs per virtual desktop going as low as $3.03.                     

Windows Server 2012 temporary license grant oportunities

Bottom Line:  Entities can avoid licensing costs while migrating to Windows Server 2012 if they plan now for their future hardware and software needs and take advantage of the special temporary licensing grants that exist.

Starting in April of this year, Microsoft released a new version of their System Center product.  This was the first in what will be a series of new server products versions that Microsoft will release throughout this year and into next year.  Along with the release of the new server software, Microsoft has also been changing the licensing of each product released.  Those aware of the licensing grants being extended by Microsoft will find opportunities to avoid cost while gaining server software licensing.  Over the next few blog posts we will examine license grant opportunities that may be taken advantage of during the migration to Windows Server 2012, System Center 2012, and SQL Server 2012.  Windows Server 2012 will be the subject of this post followed by a post which will examine how the Windows Server 2012 feature and licensing changes will reduce the cost of hosting virtual desktops on the Windows Server Hyper-v platform.        

Windows Server 2008 R2 to Windows Server 2012 Licensing

Windows Server 2008 R2 is licensed under two models in the Volume License programs, the Server plus Client Access License (CAL) model, and the Processor plus CAL model.  The Datacenter and the Itanium editions are governed by the Processor plus CAL licensing, while the Enterprise and the Standard editions are governed by the Server plus CAL licensing.  Under the 2008 R2 Processor plus CAL licensing, each physical processor on a server must be licensed and the server can have no less than two processors.  With the 2008 R2 Server plus CAL licensing, each server must be assigned a license.  The Windows Server 2008 R2 Standard Edition is limited to managing four physical processors, while the2008 R2 Enterprise Edition Software can operate up to 8 processors.  

With the introduction of Windows Server 2012 there will be only two editions, Standard and Datacenter, both of which will operate under the Processor plus CAL based licensing.  Each Windows Server 2012 license will cover up to two processors on a server as opposed to one processor under the 2008 R2 processor licenses.  Unlike the editions from the 2008 R2 version, both 2012 editions will have the same features sets.  The difference in the editions will be with how many virtual machines may run as dictated by a given edition’s license.  A Windows Server 2012 Standard edition license will allow up to two virtual machines utilizing two processors while the Windows Server 2012 Processor edition license will allow an unlimited number of virtual machines to utilize two processors. 

Windows Server 2008 R2 to Windows Server 2012 Software Assurance migration rights

 Holders of Windows Server 2008 R2 licenses, which are covered by Software Assurance (SA), will be granted Windows Server 2012 licenses as follows (also see Windows Server 2008 R2 to Windows Server 2012 Software Assurance conversion table below).  Both of the server based editions, Enterprise and Standard, will migrate to processor based editions and will automatically translate as follows.  Windows Server 2008 R2 Standard edition licenses will convert to Windows Standard 2012 version on a one-to-one ratio, while the Windows Server 2008 R2 Enterprise edition will receive two Windows Server 2012 Standard edition licenses for each license covered by SA.  The Windows Server 2008 R2 Datacenter covered with SA will be migrated to Windows Server 2012 Datacenter but will require two Windows Server 2008 R2 Datacenter licenses for each Windows Server 2012 Datacenter license granted.  Windows Server Itanium Based edition will be discontinued with the introduction of Windows Server 2012.  Thus, Microsoft will grant the holders of the Windows Server 2008 R2 Itanium Based licenses a Windows Server 2012 Datacenter edition license for each Itanium license covered by SA.  During the transition of Standard and Enterprise editions from Server plus CAL to Processor plus CAL, Microsoft is providing customers with a grant for additional licenses if the previous mentioned grants do not adequately license their servers.    This means, for the Standard edition licenses, if the software exists on a four processors server, the license owner is entitled to an additional, no cost, Windows Server 2012 Standard license.  Any Windows Server 2008 R2 Enterprise Edition covered with SA that exists on an eight processor server may qualify for two additional, no cost, Standard Edition licenses.  In order for the licenses to qualify for the additional licenses, the customer must conduct a self-audit before the renewal the Volume License Agreement under which the licenses are maintained, using an inventory tool that records the processor count for the Windows Server installation.              

Windows Server 2008 R2 to Windows Server 2012 Software Assurance conversion table

WS 2008 R2 Server edition	WS 2012 Server edition	2008 R2 to 2012 license conversion ratio	Additional grant requirements
Standard	Standard	1:1
Enterprise	Standard	1:2
Datacenter	Datacenter	2:1
Itanium	Datacenter	1:1
Standard on a 4 processor server	Standard	1:2	Requires self-inventory of server hardware
Enterprise on an 8 processor server	Standard	1:4	Requires self-inventory of server hardware

Actions to be considered

The most of the previously discussed license migration paths automatically provide the customer with a specific number of licenses without any further action beyond having the Windows Server 2008 R2 license covered by SA.  As mentioned earlier, it is possible to qualify for more licenses for the Standard edition and Enterprise edition licenses if the automatic conversion will not cover the number of processors in the server.  In order to qualify for additional licenses a self-inventory must be done with Microsoft Assessment and Planning (MAP) Toolkit or different inventory tool that can report a time/date-stamped inventory of the number processors on the server with Windows Server installations.  The assessment must occur before the existing agreement is renewed; otherwise the conversion will default to the standard conversion ratio.  If an upgrade to new servers with more processors is being considered in the near future, the acquisition of the hardware before the renewal of the Volume License Agreement would allow the customer to take advantage of this license grant.  Otherwise, the same hardware purchase after the agreement renewal date would require the purchase of additional Windows Server Standard licenses. 

In the event that a customer owns Enterprise edition licenses and they do not want to have the Standard edition license that will routinely occur during the conversion between Windows Server 2008 R2 and Windows Server 2012, they can perform an edition step-up.  A step-up allows the owner of the license to upgrade an existing license covered by SA to the next edition level up by paying the difference in the price of the two editions.  In the case of this Enterprise to Datacenter edition step-up, it must occur before the release of Windows Server 2012.  After the release of Windows Server 2012, the Enterprise edition and the related step-up will no longer be on the Microsoft pricing sheet and therefore will not be permitted.

This final option for action is one that is not promoted by Microsoft, but could greatly benefit any organization that takes advantage the license grant.  In December 2010, after Microsoft had announced that they would discontinue the Windows Server Itanium edition, they posted that they would grant licenses covered with SA with a license of the next version of Datacenter.  Presently the Window Server 2008 R2 Itanium License may be acquired for the same price as the Windows Server 2008 R2 Datacenter license.  Two Windows Server 2008 R2 Datacenter edition license are required in order to migrate to the Windows Server 2012 Datacenter edition, but only one Windows Server Itanium edition license is needed for the conversion.  This means that until the release of Windows Server 2012, a Windows Server 2008 R2 Itanium license with SA may be purchased and one Windows Server 2012 Datacenter license will be granted.  In effect, for a short time, Windows Server 2012 Datacenter may be acquired for half price.