Windows Server 2008 - 2022 White Paper

Executive Summary

In today’s dynamic and technology-driven environment, organizations depend on robust server infrastructures to maintain operational efficiency and business continuity. Microsoft Windows Server, a cornerstone of enterprise IT environments, offers extensive capabilities for server management, security, and application hosting. However, the complexity and cost associated with Windows Server licensing often pose significant challenges for businesses. This white paper explores the intricacies and financial implications of Windows Server licensing, providing a comprehensive understanding and strategies for cost optimization.

The primary factors contributing to the high cost of Windows Server licenses are twofold. First, the licensing model itself is multifaceted, with various editions and options that can be difficult to navigate. Microsoft’s licensing structure includes Standard, Datacenter, and other specialized editions, each catering to different business needs and workloads. This variety, while offering flexibility, can also lead to confusion and suboptimal licensing choices. Second, inadequate planning and management of server resources can exacerbate costs. Over-provisioning, where more licenses are purchased than necessary, and under-utilization, where the full potential of the licenses is not realized, are common pitfalls.

To address these challenges effectively, a multifaceted approach is required. This white paper outlines a detailed guide on best practices and strategies designed to maximize the value derived from Windows Server licenses. It covers aspects such as proper license selection, efficient resource allocation, and continuous monitoring to ensure compliance and optimal use. By implementing these strategies, businesses can achieve significant cost savings and enhance their overall IT efficiency. This white paper aims to demystify the complexities of Windows Server licensing and empower organizations with the knowledge to manage their server environments more cost-effectively.

Objective and Target Audience

The primary goal of this document is to empower IT leaders with essential and reliable knowledge and tools to adeptly navigate the complexities of Windows Server licensing.

This white paper does not aim to replace the official Microsoft documentation but to provide much-needed context and clarity derived from experience managing successful SAM programs and Microsoft license audits. It is designed to be a valuable resource for Software Asset Managers, Software Licensing Specialists, IT Procurement Professionals, IT Service Providers, IT Managers, IT Consultants, Analysts, Sys Admins and CIOs.

By offering practical insights and actionable strategies, this document seeks to enhance the understanding and management of Windows Server licenses, ultimately driving cost efficiency and operational effectiveness in IT environments.

Problem Statement

The increasing complexity of Windows Server environments stems from various factors, including diverse and ever-evolving licensing models, the intricacies of Windows Server’s specific licensing requirements, rapidly changing technology trends, and the varied needs of businesses and end-users. Windows Server is a cornerstone for many enterprises, supporting critical applications and services. Understanding and effectively managing these licenses is crucial for maintaining operational efficiency and cost control.

Windows Server licensing has undergone significant changes, adapting to the shifting paradigms in software deployment and usage. With options ranging from core-based licensing to Server + CAL (Client Access License) models, and more recent cloud-based and hybrid scenarios, organizations often face challenges in identifying the most cost-effective and compliant licensing strategy. Each model comes with specific considerations, such as core counts, virtualization, active SA (Software Assurance), and user access levels, which can significantly impact both cost and compliance.

Microsoft’s enterprise software, including Windows Server, has experienced a trend of consistent price increases over the years. These increases reflect not only Microsoft’s strategy in evolving its product lineup but also the broader dynamics in the enterprise software market. The recent history of Windows Server’s pricing indicates notable changes in Microsoft’s pricing strategy, reflecting the added value and features introduced over time.

For instance, the introduction of Windows Server 2022 brought several enhancements^[1], including advanced multi-layer security, hybrid capabilities with Azure, and flexible application platform improvements. These enhancements, while providing substantial benefits, also come with increased licensing costs. Organizations need to stay informed about these changes and strategically plan their software investments to avoid unnecessary expenses and ensure compliance.

The price adjustments affect various licensing models and have implications for customers using Windows Server in different environments, including on-premises, cloud, and hybrid setups. For existing Software Assurance customers, understanding the timing of price increases and renewal cycles is essential to manage costs effectively.

This evolution in pricing strategy highlights the ongoing development of Microsoft’s enterprise software offerings, reflecting the industry’s shift towards more advanced and feature-rich solutions. The increase in costs is aligned with the significant enhancements in Windows Server’s capabilities, particularly in its latest versions, which include features like improved security, enhanced hybrid integration, and better support for modern application architectures.

For businesses and IT asset management professionals, these changes underscore the importance of staying informed about licensing costs and models. It also emphasizes the need for strategic planning around software investments, especially for organizations heavily reliant on Microsoft’s ecosystem.

Understanding the different Windows Server feature sets against organizational needs requires in-depth knowledge and strategic planning. The growing preference for cloud environments, including Azure services, introduces new licensing considerations and potential benefits but also adds layers of complexity in terms of license management and cost optimization.

Most common issues

Navigating the realm of Windows Server licensing is fraught with potential pitfalls. Even seasoned IT professionals and decision-makers can stumble upon various licensing challenges, leading to compliance issues and financial repercussions. Below are some of the most common Windows Server licensing issues, accompanied by examples for better understanding.

Compliance Risk

Microsoft SQL Server is a critical component in many IT environments, spanning traditional datacenters, public clouds, containerized environments, and virtualized environments. Ensuring compliance with Microsoft SQL Server licensing terms and conditions is essential for IT leaders to effectively manage their licensing requirements and avoid potential penalties.

Q: What is Microsoft license compliance verification (commonly known as “audit”)?

A: Microsoft license compliance verification (commonly known as “audit”) is a formal, mandatory compliance review of a company’s use of Microsoft products and services, and it is part of the Microsoft license and contract compliance program. Microsoft conducts industry-standard compliance reviews with its business customers through an independent auditor pursuant to the terms of their agreement. This review is an effort to help customers achieve and maintain license compliance, and to protect Microsoft intellectual property rights. Therefore, be assured that unless Microsoft invokes its contractual right to verify compliance via a third-party accounting firm (as fully documented in your Volume Licensing Agreement), you are not involved in a license compliance verification.

Read the full FAQ: Source

Overview of Licensing Terms and Conditions

Microsoft SQL Server licensing is intricate, involving various factors such as the type of deployment, the number of cores, and the edition of SQL Server being used. IT leaders must be familiar with these terms to allocate licenses appropriately across their IT environments. Understanding bundling and exclusion scenarios is also crucial to avoid over- or under-licensing.

Audit and Compliance Clauses

Enterprise Agreement

Microsoft includes audit rights in their Enterprise Agreement, similar to those seen in other enterprise software agreements. The audit clause is typically found in Section 10 of the Enterprise Agreement under “Compliance Verification.” The clause generally includes the following provisions:

Microsoft Enterprise Agreement^[3]

e.g.

Compliance Verification: During the term of this agreement and for a period of one (1) year thereafter, Microsoft may, at its expense, verify compliance with the terms of the agreement. This verification may include an audit of your use of the software and access to associated records and systems.

Universal License Terms

This clause indicates that Microsoft reserves the right to employ technical mechanisms to ensure that customers adhere to the terms of their software licenses. These technical measures might include methods such as software activation, validation processes, and the use of product keys. Additionally, Microsoft can verify whether customers are complying with the licensing terms outlined in their volume license agreement. Essentially, this means Microsoft can audit the customer’s use of its software to confirm that it aligns with the agreed-upon licensing terms.

Universal License Terms > For all Software^[4]

e.g.

“Microsoft may use technical measures to enforce terms that restrict Customer’s use of certain versions of Product and may verify compliance with those terms as provided in Customer’s volume license agreement.”

Audit Process

1. Notice: Microsoft will provide at least thirty (30) days prior written notice before conducting any audit.
2. Scope and Cooperation: You are required to provide reasonable access to facilities, systems, and records to verify compliance. This includes making personnel available to facilitate the audit process.
3. Resolution of Non-Compliance: If an audit reveals any non-compliance, you must resolve the issue within thirty (30) days from the date of notice. This may involve purchasing additional licenses to cover any under-licensed usage.
4. Costs: If the audit reveals an underpayment exceeding five percent (5%) of the total license fees payable, you may also have to reimburse Microsoft for the cost of the audit.

Maintaining compliance with Microsoft SQL Server licensing terms is crucial to avoid penalties and legal action and to ensure smooth operation of IT environments. Regularly reviewing and understanding the Product Terms and being prepared for potential audits can help mitigate compliance risks.

Problem Solving Process

The problem solving process can be structured into four logical parts:

1. Entitlement and contract analysis where we clarify three key aspects: the number of licenses we are entitled to use, the specific types of these licenses, and the terms and conditions governing their use.
2. Deployment analysis where we determine the actual number of licenses used based on what is installed and how the different Windows Server instances are configured and setup in the IT environment.
3. Reconciliation where we uncover the gaps, surplus and other possible issues by reconciling the license entitlements with the used software licenses.
4. Optimisation and remediation scenarios, where we identify potential cost saving opportunities as well as ways to fix any compliance issues.

Entitlement and Contract Analysis

A proper entitlement and contract analysis start with a complete inventory of the relevant data needed for the analysis.

Data Collection

For a proper analysis these are the go to sources to collect:

• Microsoft Licensing Statement (MLS) which is requested from your Licensing Service Provider (LSP). This is often the most reliable record of your entitlements;
• Check for owned entitlement data that may be missing from the MLS under the following volume licensing programs:
  • Cloud Solution Provider;
  • Open Value;
  • Microsoft Products and Services Agreement;
  • Microsoft Customer Agreement;
• Microsoft Volume Licensing Service Center (VLSC) export. It’s worth noting that VLSC is transitioning to the Microsoft 365 admin center. Users accessing functionality in VLSC will have permissions to see and manage that same functionality in a new volume licensing blade in Microsoft 365 admin center.
• Microsoft Contracts;
• Any other transactional documents: purchasing documents, invoices, purchasing orders etc.

Once collected these entitlement documents need to be properly stored, referenced and analysed and the information consolidated into one single source of truth with references to the raw data.

Microsoft Licensing Statement analysis

The MLS is an estimate of license entitlements by product and version based on the Volume License agreements and purchase transactions under those agreements (as reported by resellers to Microsoft).

The MLS is a document organised into several tabs, each serving a specific purpose in helping organisations understand and manage their Microsoft licenses.

When analysing the MLS, the main challenge lies in reconciling the License Summary tab with the Transaction Data tab as there are often inconsistencies in the reported quantities. We recommend doing the analysis starting at transaction level in order to fully understand how the license entitlements changed over time.

Entitlements missing from the MLS

The Microsoft Licensing Statement (MLS) is comprehensive, but there are instances where it might not include all owned entitlement data, especially under certain volume licensing programs. Here’s more detail on each:

Microsoft VLSC export analysis

The Microsoft Volume Licensing Service Center (VLSC)^[5] is an online platform provided by Microsoft for managing volume licensing agreements, downloading licensed software, and accessing volume license keys.

The VLSC export is typically organised into two tabs, each serving a specific purpose in helping organisations understand and manage their Microsoft licenses.

Microsoft Contracts

Microsoft license contract analysis is a crucial process for organisations to understand, manage, and optimise their use of Microsoft software products.

Understanding Microsoft Volume Licensing Models

Components of a License Contract Analysis

Transactional Documents

Transactional documents like purchasing documents, invoices, and purchase orders are complementary to the rest of the data and create a more reliable source of truth. Here’s why:

• Purchasing Documents: These documents provide proof of purchase and often detail the specific licenses and quantities purchased. They are essential for verifying the accuracy of MLS data and can be used to identify any discrepancies.
• Invoices: Invoices offer a financial record of the transactions, including the cost and the terms of purchase. They are useful for budgeting and financial planning, as well as for compliance audits.
• Purchase Orders: Purchase orders are official documents issued by a buyer committing to pay the seller for the sale of specific products or services to be delivered in the future. They serve as a legal offer and can be used to track the procurement of licenses and ensure they align with organisational needs and licensing agreements.
  

Deployment Analysis

  A proper entitlement and contract analysis start with a complete discovery and inventory of the devices in scope for the analysis for the analysis.

Data Collection

  Discovering and scanning all the devices in scope is not an easy task, especially in large environments. There’s a wide variety of tools and data sources one could leverage to collect the necessary data for a complete technical analysis.

  These are the most common data sources and tools that have worked great for us in the past based on our experience:

Windows Server Licensing Model 2008 - 2022

*Please check Appendix A**1. Windows Server Release and built numbers *for more information.

Microsoft Windows Server 2022

Reference: Microsoft Windows Server 2022 Licensing Guide

Windows Server 2022 commercial editions

Key capacity limits across Windows Server 2022 editions

Windows Server 2022 Software Assurance

Windows Server 2022 Licensing Model

A. Windows Server 2022 Per Core

Windows Server 2022 uses a core-based licensing model. Each physical core in the server must be licensed, and the minimum number of core licenses required is 16 per server, and at least 8 core licenses per physical processor.

To determine and acquire the correct number of core licenses needed, customers must:

1. Count the total number of physical cores in the server, and apply the 8 core minimum.
2. Purchase the appropriate number of core licenses required for the server. Core licenses are sold in packs of two, so customers must divide the number of licenses required by two to determine the actual number of line items (licensing SKUs) to order.

**A.1. Licensing Windows Server 2022 individual virtual machines **

For virtualized environments, Windows Server 2022 Standard Edition allows for up to two virtual OSEs (or VMs) per licensed server. If more VMs are needed, additional licenses must be purchased for each set of 2 VMs.

For Datacenter Edition, licensing all the physical cores on the server allows for unlimited VMs. Each virtual core (v-core) supporting virtual OSEs must be licensed accordingly.

1. License the physical cores in the host server.
2. For Standard Edition: Each additional 1 or 2 VMs beyond the first 2 VMs requires additional core licenses for all physical cores in the server.
   

B. Windows Server 2022 Server + CAL

Under the Server+CAL licensing model, each OSE running Windows Server Essentials or any of its components must have a Windows Server server license assigned to the physical server hosting the OSE. Each server license allows customers to run any number of Windows Server instances in a single OSE, either physical or virtual.

The Server + CAL model is not available for Standard and Datacenter editions.

**B.1. Licensing Windows Server 2022 individual virtual machines **

To license individual VMs using the Server+CAL model, customers must ensure that each VM has a server license. Additionally, each user or device accessing Windows Server software, regardless of a virtual or physical deployment, requires a Windows Server CAL (for the same or a later version).

1. License each virtual machine with a server license.
2. License each user or device with a CAL (for the same or a later version).

C. Licensing Windows Server 2022 for maximum virtualisation

With Windows Server Datacenter Edition, customers who have licensed all physical cores on the server (or cluster) can run an unlimited number of instances of the software in any number of OSEs/containers (physical and/or virtual). For example, a server with 16 core licenses can run Windows Server software in an unlimited number of VMs, regardless of the number of virtual cores allocated to each VM.

• Customers who have licensed all the physical cores on the server and want to run more VMs than the number of physical cores must assign additional core licenses to the licensed server.
• Each additional core license allows the deployment of additional VMs on the server.
  

On servers fully licensed (i.e., based on physical cores) under Windows Server Datacenter licenses, customers’ use rights allow any number of instances of the software to run in any number of OSEs/containers (physical or virtual). This benefit enables customers to deploy an unlimited number of VMs to handle dynamic workloads and fully utilize hardware computing capacity.

1. Fully license the physical server with Windows Server Datacenter Edition core licenses
2. Deploy an unlimited number of virtual machines

D. Licensing Windows Server 2022 in containers

Windows Server can be deployed on Linux and Docker platforms, allowing customers to choose their platform and deploy Windows Server in containers using Docker container technology.

Containers provide operating system-level virtualization that allows multiple isolated applications to be run on a single system.

For licensing, an operating system environment is defined as all or part of an operating system instance or all or part of a virtual operating system instance, which enables separate machine identity. Containers and virtual machines are structured differently but are considered the same from a licensing perspective.

1. License all physical cores on the server if deploying Windows Server Datacenter Edition.
2. For Standard Edition, license per physical core, considering the need for additional licenses if running more than two VMs.

Windows Server 2022 - Step-ups, Upgrades / Downgrades

When licensing SQL Server software, several deployment options are available to support a variety of customer upgrade scenarios.

Microsoft Windows Server 2019

Reference: Microsoft Windows Server 2019 Licensing Guide

Windows Server 2019 commercial editions

Key capacity limits across Windows Server 2019 editions

Windows Server 2019 Software Assurance

Windows Server 2019 Licensing Model

A. Windows Server 2019 Per Core

Windows Server 2019 uses a core-based licensing model similar to Windows Server 2022. Each physical core in the server must be licensed, and the minimum number of core licenses required is 16 per server, and at least 8 core licenses per physical processor.

To determine and acquire the correct number of core licenses needed, customers must:

1. Count the total number of physical cores in the server, and apply the 8 core minimum.
2. Purchase the appropriate number of core licenses required for the server. Core licenses are sold in packs of two, so customers must divide the number of licenses required by two to determine the actual number of line items (licensing SKUs) to order.

**A.1. Licensing Windows Server 2019 individual virtual machines **

For virtualized environments, Windows Server 2019 Standard Edition allows for up to two virtual OSEs (or VMs) per licensed server. If more VMs are needed, additional licenses must be purchased for each set of 2 VMs.

For Datacenter Edition, licensing all the physical cores on the server allows for unlimited VMs. Each virtual core (v-core) supporting virtual OSEs must be licensed accordingly.

1. License the physical cores in the host server.
2. For Standard Edition: Each additional 1 or 2 VMs beyond the first 2 VMs requires additional core licenses for all physical cores in the server.
   

B. Windows Server 2019 Server + CAL

Under the Server+CAL licensing model, each OSE running Windows Server Essentials or any of its components must have a Windows Server server license assigned to the physical server hosting the OSE. Each server license allows customers to run any number of Windows Server instances in a single OSE, either physical or virtual.

The Server + CAL model is not available for Standard and Datacenter editions.

**B.1. Licensing Windows Server 2019 individual virtual machines **

To license individual VMs using the Server+CAL model, customers must ensure that each VM has a server license. Additionally, each user or device accessing Windows Server software, regardless of a virtual or physical deployment, requires a Windows Server CAL (for the same or a later version).

1. License each virtual machine with a server license.
2. License each user or device with a CAL (for the same or a later version).
   

C. Licensing Windows Server 2019 for maximum virtualisation

With Windows Server Datacenter Edition, customers who have licensed all physical cores on the server (or cluster) can run an unlimited number of instances of the software in any number of OSEs/containers (physical and/or virtual). For example, a server with 16 core licenses can run Windows Server software in an unlimited number of VMs, regardless of the number of virtual cores allocated to each VM.

• Customers who have licensed all the physical cores on the server and want to run more VMs than the number of physical cores must assign additional core licenses to the licensed server.
• Each additional core license allows the deployment of additional VMs on the server.
  

On servers fully licensed (i.e., based on physical cores) under Windows Server Datacenter licenses, customers’ use rights allow any number of instances of the software to run in any number of OSEs/containers (physical or virtual). This benefit enables customers to deploy an unlimited number of VMs to handle dynamic workloads and fully utilize hardware computing capacity.

1. Fully license the physical server with Windows Server Datacenter Edition core licenses
2. Deploy an unlimited number of virtual machines

D. Licensing Windows Server 2019 in containers

Windows Server can be deployed on Linux and Docker platforms, allowing customers to choose their platform and deploy Windows Server in containers using Docker container technology.

Containers provide operating system-level virtualization that allows multiple isolated applications to be run on a single system.

For licensing, an operating system environment is defined as all or part of an operating system instance or all or part of a virtual operating system instance, which enables separate machine identity. Containers and virtual machines are structured differently but are considered the same from a licensing perspective.

1. License all physical cores on the server if deploying Windows Server Datacenter Edition.
2. For Standard Edition, license per physical core, considering the need for additional licenses if running more than two VMs.

Windows Server 2019 - Step-ups, Upgrades / Downgrades

When licensing SQL Server software, several deployment options are available to support a variety of customer upgrade scenarios.

Microsoft Windows Server 2016

Reference: Microsoft Windows Server 2016 Licensing Guide

Windows Server 2016 commercial editions

Key capacity limits across Windows Server 2016 editions

Windows Server 2016 Software Assurance

Windows Server 2016 Licensing Model

With the 2016 version Microsoft introduced the Per Core model, which represented a major and anticipated change from the legacy Per CPU model.

A. Windows Server 2016 Per Core

Windows Server 2016 uses a core-based licensing model similar to Windows Server 2016. Each physical core in the server must be licensed, and the minimum number of core licenses required is 16 per server, and at least 8 core licenses per physical processor.

To determine and acquire the correct number of core licenses needed, customers must:

1. Count the total number of physical cores in the server, and apply the 8 core minimum.
2. Purchase the appropriate number of core licenses required for the server. Core licenses are sold in packs of two, so customers must divide the number of licenses required by two to determine the actual number of line items (licensing SKUs) to order.

**A.1. Licensing Windows Server 2016 individual virtual machines **

For virtualized environments, Windows Server 2016 Standard Edition allows for up to two virtual OSEs (or VMs) per licensed server. If more VMs are needed, additional licenses must be purchased for each set of 2 VMs.

For Datacenter Edition, licensing all the physical cores on the server allows for unlimited VMs. Each virtual core (v-core) supporting virtual OSEs must be licensed accordingly.

1. License the physical cores in the host server.
2. For Standard Edition: Each additional 1 or 2 VMs beyond the first 2 VMs requires additional core licenses for all physical cores in the server.
   

B. Windows Server 2016 Server + CAL

Under the Server+CAL licensing model, each OSE running Windows Server Essentials or any of its components must have a Windows Server server license assigned to the physical server hosting the OSE. Each server license allows customers to run any number of Windows Server instances in a single OSE, either physical or virtual.

The Server + CAL model is not available for Standard and Datacenter editions.

**B.1. Licensing Windows Server 2016 individual virtual machines **

To license individual VMs using the Server+CAL model, customers must ensure that each VM has a server license. Additionally, each user or device accessing Windows Server software, regardless of a virtual or physical deployment, requires a Windows Server CAL (for the same or a later version).

1. License each virtual machine with a server license.
2. License each user or device with a CAL (for the same or a later version).

C. Licensing Windows Server 2016 for maximum virtualisation

With Windows Server Datacenter Edition, customers who have licensed all physical cores on the server (or cluster) can run an unlimited number of instances of the software in any number of OSEs/containers (physical and/or virtual). For example, a server with 16 core licenses can run Windows Server software in an unlimited number of VMs, regardless of the number of virtual cores allocated to each VM.

• Customers who have licensed all the physical cores on the server and want to run more VMs than the number of physical cores must assign additional core licenses to the licensed server.
• Each additional core license allows the deployment of additional VMs on the server.
  

On servers fully licensed (i.e., based on physical cores) under Windows Server Datacenter licenses, customers’ use rights allow any number of instances of the software to run in any number of OSEs/containers (physical or virtual). This benefit enables customers to deploy an unlimited number of VMs to handle dynamic workloads and fully utilize hardware computing capacity.

1. Fully license the physical server with Windows Server Datacenter Edition core licenses
2. Deploy an unlimited number of virtual machines

D. Licensing Windows Server 2016 in containers

Windows Server can be deployed on Linux and Docker platforms, allowing customers to choose their platform and deploy Windows Server in containers using Docker container technology.

Containers provide operating system-level virtualization that allows multiple isolated applications to be run on a single system.

For licensing, an operating system environment is defined as all or part of an operating system instance or all or part of a virtual operating system instance, which enables separate machine identity. Containers and virtual machines are structured differently but are considered the same from a licensing perspective.

1. License all physical cores on the server if deploying Windows Server Datacenter Edition.
2. For Standard Edition, license per physical core, considering the need for additional licenses if running more than two VMs.

Windows Server 2016 - Step-ups, Upgrades / Downgrades

When licensing SQL Server software, several deployment options are available to support a variety of customer upgrade scenarios.

Microsoft Windows Server 2012 and 2012 R2

Reference: Microsoft Windows Server 2012 R2 Licensing Guide

Windows Server 2012 and 2012 R2 commercial editions

Key capacity limits across Windows Server 2012 and 2012 R2 editions

Windows Server 2012 and 2012 R2 Software Assurance

Windows Server 2012 and 2012 R Licensing Model

A. Windows Server 2012 and 2012 Per Processor + CAL

Windows Server 2012 R2 uses a processor-based licensing model for its Datacenter and Standard editions. Each license covers up to two physical processors on a server, and additional Client Access Licenses (CALs) are required for every user or device accessing the server.

To determine and acquire the correct number of processor licenses needed, customers must:

1. Count the total number of physical processors in the server.
2. Purchase the appropriate number of processor licenses, with each license covering up to two processors.

A.1. Licensing Windows Server 2012 R2 individual virtual machines

For virtualized environments, Windows Server 2012 R2 Standard Edition allows for up to two virtual OSEs (or VMs) per licensed server with two processors. If more VMs are needed, additional licenses must be purchased for each set of two VMs.

For Datacenter Edition, licensing all the physical cores on the server allows for unlimited VMs. Each virtual core (v-core) supporting virtual OSEs must be licensed accordingly.

For Datacenter Edition, licensing all the physical processors on the server allows for unlimited VMs.

1. License the physical processors in the host server.
2. For Standard Edition: Each additional 1 or 2 VMs beyond the first 2 VMs requires additional processor licenses for all physical processors in the server.
   

B. Licensing Windows Server 2012 R2 Essentials and Foundation

The Essentials and Foundation editions of Windows Server 2012 R2 follow a server-based licensing model:

• Essentials Edition: Covers a server with up to two physical processors and allows up to 25 users without needing CALs.
• Foundation Edition: Designed for single-processor servers and allows up to 15 users without requiring CALs. Available only through OEMs.

C. Licensing Windows Server 2012 R2 for maximum virtualization

With Windows Server Datacenter Edition, customers who have licensed all physical processors on the server (or cluster) can run an unlimited number of instances of the software in any number of OSEs/containers (physical and/or virtual). For example, a server with licenses covering two processors can run Windows Server software in an unlimited number of VMs.

• Customers who have licensed all the physical processors on the server and want to run more VMs than the number of physical processors must assign additional processor licenses to the licensed server.
• Each additional processor license allows the deployment of additional VMs on the server.

On servers fully licensed (i.e., based on physical processors) under Windows Server Datacenter licenses, customers’ use rights allow any number of instances of the software to run in any number of OSEs/containers (physical or virtual). This benefit enables customers to deploy an unlimited number of VMs to handle dynamic workloads and fully utilize hardware computing capacity.

1. Fully license the physical server with Windows Server Datacenter Edition processor licenses.
2. Deploy an unlimited number of virtual machines.

D. Client Access License (CAL) Requirements

For both Standard and Datacenter editions, Windows Server 2012 R2 requires CALs for each user or device accessing the server. Additional CALs are required for certain functionalities, such as Remote Desktop Services or Active Directory Rights Management Services, which are not covered under the basic CAL.

1. License each user or device accessing the server with a Windows Server CAL.
2. Purchase additional CALs for accessing specific advanced features (e.g., RDS CALs, ADRMS CALs).

Case Studies

Case Study #1: Implementing SAM Practices for SQL Server Licensing Compliance in a Mid-Sized Energy Company (“Contoso Energy”)

Background

Contoso Energy, a mid-size energy company, faced challenges in managing its Microsoft SQL Server licenses. With a growing IT infrastructure and lack of structured SAM practices, Contoso Energy struggled to maintain compliance and optimise its software licensing costs.

Introduction of SAM Practices

To address these challenges, Contoso Energy initiated a project to introduce SAM practices. A dedicated SAM team was established, responsible for developing policies, work standards, and implementing a SAM tool. The team’s primary task was to create an Effective License Position (ELP) report, which required detailed analysis of acquired software licenses and an inventory of the software in use.

Discovery and Analysis

The first phase involved gathering data on purchased licenses and conducting a thorough inventory of the IT environment. Contoso Energy didn’t have a SAM Solution in place yet, so they collected the required data from two existing IT tools: Microsoft SCCM and Lansweeper and used a PowerCLI script to collect the virtualisation topology from VMware. This allowed them to save time on the data collection part as the tools were already part of their IT stack they didn’t have to deploy any agents. And by consolidating the data from the tools, they ensured they got maximum coverage over their assets. Once the technical deployment data was collected, Contoso used a SAM discovery tool to analyse it.

The SAM team meticulously reviewed all purchased records using an updated Microsoft Licensing Statement (MLS) as a base and performed an entitlement inventory reconciliation. They uploaded the validated MLS to an entitlement management tool and generated an Effective License Position (ELP) for SQL Server.

Initial Findings

The initial ELP report revealed a concerning scenario: Contoso Energy required more Windows Server licenses than it had purchased. This negative compliance status was primarily due to several factors: some Windows Server Datacenter editions were deployed alongside Standard edition instances without corresponding license purchases (a result of a lack of procedures), improper tracking of server core deployments, and failure to account for virtual machines properly.

Addressing the License Shortfall

The straightforward solution was to purchase additional licenses to cover the shortfall. However, the SAM team advocated for a more strategic approach. They proposed analyzing the company’s server utilization patterns and processes to identify more cost-effective solutions.

Datacentre Configuration and License Optimisation

Contoso’s datacentre comprised several hosts with varying configurations, from 16 to 48 physical cores. Clustering was implemented along with vMotion, enhancing management automation, reliability, and availability. Virtual machines had virtual cores assigned in the range of 8 to 16 virtual cores.

Proposing a Solution

The SAM team suggested a potential solution to reduce the required licenses by optimizing the use of Windows Server Standard and Datacenter editions. This approach involved analyzing virtual machine usage and consolidating workloads where possible to minimize the number of physical hosts that needed to be fully licensed under the Datacenter edition.

They also proposed to move non-critical applications to servers licensed under the Windows Server Standard edition, reducing the number of Datacenter licenses required. Additionally, they documented which servers were over-provisioned with cores and set a project to adjust the core assignments in line with actual usage.

Finally, by consolidating servers and optimizing the deployment of virtual machines, they aimed to reduce the total number of licenses required, aligning the company’s needs with their existing licenses more effectively.

Evaluating Impact and Feasibility

Implementing this solution required careful consideration of its impact on the datacenter’s configuration, server processing capacity, and the operation of critical applications. The SAM team collaborated with other departments, including IT and operations, to assess the feasibility of this solution.

A steering committee comprising key stakeholders in IT service management was convened to deliberate on the proposed changes. The primary concern was whether reducing the number of physical hosts running Windows Server Datacenter and optimizing virtual core assignments would affect the reliability and availability of company resources.

Decision and Outcome

After thorough analysis and discussions, the steering committee concluded that optimizing the server environment by consolidating workloads and reassigning cores was feasible without significantly compromising reliability or availability. This decision allowed Contoso Energy to rationalize its Windows Server license consumption, reducing the number of required licenses to match their existing licenses, ensuring compliance without the immediate need for additional license purchases.

Additionally, the excess licenses were repurposed to support the company’s hybrid cloud strategy, utilizing Azure Hybrid Use Benefits to move workloads to Azure, thereby leveraging their existing on-premises licenses to reduce cloud costs.

Conclusion

This case study demonstrates the critical role of SAM practices and leveraging the proper tooling in managing software licenses, particularly for complex products like Windows Server. By adopting a proactive and analytical approach, Contoso Energy not only achieved compliance but also optimized its licensing strategy, highlighting the importance of SAM in modern IT environments.

Case Study #2

Archive note: the second case study described a vendor-specific SAM tool implementation and has been removed under the House rules (no product promotion).

Conclusion

In today’s dynamic and data-driven business environment, effective software asset management (SAM) is crucial. As Windows Server continues to be a foundational component for enterprise infrastructure, understanding its complex licensing models is essential for optimizing costs and ensuring compliance. This white paper has explored the multifaceted nature of Windows Server licensing, from the various editions and core-based licensing models to the common challenges and strategic solutions for cost optimization.

By emphasizing the importance of strategic planning, entitlement analysis, and comprehensive deployment assessments, this paper has provided actionable insights and best practices for maximizing the value of Windows Server investments. We have examined the specificities of Windows Server versions, from legacy editions to the latest releases, clarifying the benefits and unique characteristics of each licensing model.

The case studies presented demonstrate real-world applications of these strategies, showing how businesses like Contoso Energy and Contoso Car Company have effectively managed licensing complexities and achieved significant cost savings and compliance. These examples highlight the necessity of robust SAM practices and the importance of leveraging advanced tools like a SAM tool.

In conclusion, effective Windows Server license management goes beyond mere compliance; it involves leveraging strategic insights to enhance business value. With the right tools and practices, organizations can transform the complexities of Windows Server licensing into opportunities for optimization and growth.

Appendices

A1. Windows Server Release and built numbers

Glossary

FAQ

What are the differences in licensing Windows Server with or without Software Assurance?

Here is a side-by-side comparison highlighting the differences between Windows Server licensing with and without Software Assurance in a virtualized environment:

What is Microsoft license compliance verification (commonly known as “audit”)?

Microsoft license compliance verification (commonly known as “audit”) is a formal, mandatory compliance review of a company’s use of Microsoft products and services, and it is part of the Microsoft license and contract compliance program. Microsoft conducts industry-standard compliance reviews with its business customers through an independent auditor pursuant to the terms of their agreement. This review is an effort to help customers achieve and maintain license compliance, and to protect Microsoft intellectual property rights. Therefore, be assured that unless Microsoft invokes its contractual right to verify compliance via a third-party accounting firm (as fully documented in your Volume Licensing Agreement), you are not involved in a license compliance verification.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

What is Microsoft Software Asset Management (SAM)?

The Microsoft SAM program is a trusted IT advisory service based on industry SAM standards that help customers gain data insights, optimize licensing, minimize risks, and be more productive with their IT investments. SAM engagements provide a 360-degree view of the customer’s IT infrastructure and a set of recommendations on ways to improve their overall asset management, license management, and SAM policies and procedures. With this comprehensive view, customers get valuable recommendations on areas that are most challenging for their business. SAM engagements are performed by Microsoft SAM Certified Partners and are voluntary. We believe that SAM can be a strategic advantage for all our customers. Learn from customers how SAM has benefited their business.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

Some sources claim that Microsoft Software Asset Management (SAM) and license compliance verification (commonly known as “audit”) are the same. Is this correct?

No, Microsoft SAM and license compliance verification are not the same. The list below shows the differentiation between SAM and license compliance verification.

1. Microsoft Software Asset Management (SAM)

• Nature of engagement - Voluntary
• Performed by - Microsoft SAM Certified Partners with more flexibility in process
• Objective - Help customers maximize value, minimize risks, and achieve more with their IT investment

2. Microsoft license compliance verification (audit)

• Nature of engagement - Mandatory contractual requirement
• Performed by - Independent, internationally recognized certified public accounting firms. However, in some jurisdictions, verifications are also conducted by authorized consultants on behalf of Microsoft.
• Objective - Help customers achieve and maintain license compliance, and to protect Microsoft’s intellectual property rights

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

How does Microsoft select customers for license compliance verifications?

Microsoft uses a programmatic approach to select customers for license compliance verification. Any customer with a Microsoft volume license may be selected. Microsoft performs license compliance verifications with a limited number of customers each year, to verify customers’ compliance to the terms and conditions of their respective agreements with Microsoft.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

How can customers prepare for Microsoft license compliance verifications?

A Microsoft license compliance verification is a routine process of checking customers’ compliance with Microsoft licensing agreements. Customers who take licensing compliance seriously and have a robust internal Software Asset Management (SAM) process are likely to be better prepared for license compliance verifications. Learn how to establish an effective SAM program.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

What should customers expect from a Microsoft license compliance verification?

Microsoft will directly provide customers with a formal notification of license compliance verification. The length of an engagement varies based on the complexity of the IT environment of an organization. Per the customer’s agreement, Microsoft makes every effort to ensure minimal disruption of the customer’s day-to-day operations.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

Who performs Microsoft license compliance verifications?

Microsoft license compliance verifications are executed by independent, internationally recognized certified public accounting firms. However, in some jurisdictions, verifications are also conducted by authorized consultants on behalf of Microsoft.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

What if license compliance verifications reveal license compliance issues?

The remedies and other requirements in case of compliance issue occurs are documented in your Volume License Agreements (refer the clause on Compliance Verification). If you need additional clarification, contact your Microsoft Account Manager.

Source: License Compliance Verification FAQ | Microsoft Volume Licensing

How are Windows Server Standard and Datacenter editions licensed?

Windows Server Datacenter edition and Windows Server Standard edition are core-based license
models. Customers may license based on physical cores or by virtual machine. The option to license by virtual machine is available for customers with subscription licenses or licenses with active Software Assurance only. For both Standard and Datacenter editions, when licensing based on physical cores, the minimum number of core licenses required equals the number of physical cores on the licensed server, subject to a minimum of 8 core licenses per physical processor and a minimum of 16 core licenses per server. Alternatively, when licensing either edition by virtual machine, the number of licenses required equals the number of virtual cores allocated to the virtual machine, subject to a minimum of eight licenses per virtual machine and 16 per customer. Core licenses are sold in 2-packs as well as optional 16-packs (for convenience). Eight 2-packs and one 16-pack are priced the same and provide equivalent use
rights. However, point counts may vary, so MPSA and Open Volume customers should assess which pack sizes work best for them. Whether licensing Datacenter or Standard and whether licensing based on physical cores or by virtual machine, all user and device access to Windows Server software also requires access licenses.

Do the minimum licensing requirements apply to all servers?

Yes. When licensing based on physical cores, regardless of the number of physical processors or
physical cores on a server, the number of core licenses required equals the number of physical cores on the licensed server, subject to a minimum of 8 core licenses per physical processor and a minimum of 16 core licenses per server. When licensing by virtual machine, the number of licenses required equals the number of virtual cores allocated to the virtual machine, subject to a minimum of eight licenses per virtual machine and 16 per customer. The option to license by virtual machine is available for customers with subscription licenses or licenses with active Software Assurance only.

Do I have to license all cores on the server, even if they are disabled?

Yes, when licensing based on physical cores. All physical cores on all physical processors on a server must be sufficiently licensed, even if they have been disabled.

Can I split my Windows Server core license packs across multiple servers?

Yes. Core licenses are sold in 2-packs, as well as optional 16-packs (for convenience), and each
individual license may be assigned to a separate physical server.

Can I assign a Windows Server license to a virtual machine?

You have the option to license by virtual machine (under subscription licenses or licenses with active Software Assurance), but licenses are still assigned to the physical server. However, when you license by virtual machine, you also have the right to move licenses to another server in the same server farm at any time. This allows you to move the licenses with the virtual machine as you need to.

Can I mix Windows Server Datacenter and Standard licenses on the same server?

Not when licensing based on physical cores. All physical cores on a given server must be licensed with the same version and edition. The customer can run different editions or older versions of Windows Server software as guests within virtual OSEs, but they are not allowed to assign licenses of different versions or editions to the same physical server to license the physical cores on the server. If you are licensing by virtual machine, you would be permitted to have a mix of server versions or editions on the physical server, as long as each virtual machine was appropriately licensed based on the version and edition of software it is running. The option to license by virtual machine is available for customers with subscription licenses or licenses with active Software Assurance only.

Are CALs required for access to Windows Server Standard and Datacenter editions?

Yes, server software access for Windows Server Standard and Datacenter editions requires access licenses. Server software access for Windows Server Standard and Datacenter editions requires either Client Access Licenses (CALs) or External Connectors (ECs) whether licensing the server based on physical vcores or by virtual machine. Each user or device that accesses the licensed servers requires a Windows Server CAL. External access to the licensed server requires a CAL for each user or device or, alternatively, a Windows Server EC. Customers may use a combination of user and device CALs and External Connector licenses as required.

Which Access Licenses do I use to access Windows Server?

Windows Server Client Access Licenses (CALs) and External Connectors permit access to the same version (or earlier versions) of Windows Server server software. Each user or device that accesses the licensed servers requires a Windows Server CAL. External access to the licensed server requires CALs for each accessing user or device or, alternatively, a Windows Server External Connector. Customers may use a combination of user and device CALs and External Connector licenses as required.

CALs: Each user or device that accesses licensed servers requires a Windows Server CAL (Base
CAL). Each user or device that accesses advanced functionality on the licensed server requires the associated CAL (Additive CAL). Additive CALs must be licensed in addition to the corresponding Base CALs for access to advanced functionality.

External Connectors: External access to licensed servers requires CALs (Base CALs) for each
accessing user or device or, alternatively, a Windows Server External Connector (Base EC) for each server that is accessed. External access to advanced functionality on licensed servers requires the associated CAL (Additive CAL) for each accessing user or device or, alternatively, the associated External Connector (Additive EC) for each server accessed. Additive External Connectors must be licensed in addition to the corresponding Base External Connectors for access to advanced functionality on the licensed server.

Are there any exceptions to the CAL and External Connector requirements?

Yes, CALs and External Connectors are not required for access by another licensed server, to access server software running a web workload or HPC Workload, or to access in a physical OSE used solely for hosting and managing virtual OSEs.

What is the difference between Base and Additive access licenses?

Base access licenses provide access for Windows Server Standard and Datacenter editions. Windows Server CAL and Windows Server External Connector licenses are Base access licenses. Additive access licenses provide access to advanced server functionality and are available as CALs and External Connector licenses. CALs and External Connector licenses for Windows Server Remote Desktop Services, Windows Server Active Directory Rights Management Services, and Microsoft Identity Manager are all Additive access licenses. Additive access licenses must be acquired in addition to the corresponding Base access licenses for access to advanced server functionality.

Do I still need a separate CAL to access advanced server functionality for Windows Server?

Yes. The licensing requirements for access to advanced server functionality have not changed with Windows Server. Advanced server functionality requires Additive access licenses, which are available as CALs and External Connector. Windows Server Remote Desktop Services, Windows Server Active Directory Rights Management Services, and Microsoft Identity Manager all require Additive access licenses. Additive access licenses must be licensed in addition to the corresponding Base access licenses. Base access licenses provide access for Windows Server Standard and Datacenter editions. Windows Server CAL and Windows Server External Connector licenses are Base access licenses. Additive CALs must be licensed in addition to the corresponding Base CALs for access to advanced functionality on the licensed server.

What is the difference between Windows Server Standard and Datacenter editions?

As with prior versions, Windows Server Standard and Datacenter editions include the core functionality of Windows Server and offer different virtualization rights when licensing based on physical cores. Both editions of Windows Server include Host Guardian Service and Nano Server. Windows Server Datacenter edition includes additional features such as Shielded Virtual Machines, software-defined networking, Storage Spaces Direct, and Storage Replica.

What are some of the features available in Windows Server Datacenter and Standard editions?

There are a variety of new features in Windows Server Datacenter and Standard editions. For a
comparison, visit here.

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

Because Windows Server Standard and Datacenter editions provide different virtualization rights and offer differentiated features, the decision will be based on virtualization, datacenter, and infrastructure strategies.

Datacenter: If the customer’s strategy includes highly virtualized and software-defined datacenter environments, Datacenter edition provides optimum flexibility. When all physical cores on the server are licensed, Datacenter edition provides rights to use unlimited Operating System
Environments (OSEs) or Hyper-V containers and unlimited Windows Server containers on the
licensed server. This edition allows elasticity to add and move virtual OSEs across Datacenter
licensed servers without needing to track the virtual OSE count on that server.

Standard: If the customer’s strategy includes low density or non-virtualized environments,
Standard edition is the right product for their needs. When all physical cores on the server are
licensed, Standard edition provides rights to use two OSEs or Hyper-V containers and unlimited
Windows Server containers on the licensed server.

What are the licensing requirements for use of Nano Server?

Nano Server is an elective deployment option for Windows Server Standard and Datacenter editions. The customer needs to assign the required number of core licenses to the physical server. For both Standard and Datacenter editions, the minimum number of core licenses required equals the number of physical cores on the licensed server, subject to a minimum of 8 core licenses per physical processor and a minimum of 16 core licenses per server.

To use Nano Server, the customer needs active Software Assurance on their Windows Server Standard or Datacenter server licenses. Additionally, they need active Software Assurance on Windows Server Base CALs or External Connectors. If they are licensed to access advanced server functionality, such as Remote Desktop Services, active Software Assurance is required on those applicable Windows Server Additive CALs or External Connectors.

What are the virtualization rights for Windows Server Standard and Datacenter editions?

This depends on whether you license based on physical cores or by virtual machine. When you license based on physical cores, Standard edition has rights to use two OSEs or two Windows Server Containers with Hyper-V isolation and unlimited Windows Server Containers without Hyper-V isolation. This requires licenses for all physical cores on the server (subject to a minimum of 8 core licenses per physical processor and a minimum of 16 core licenses per server). Datacenter edition when licensed based on physical cores has rights to use unlimited OSEs and both types of Windows Server containers As with Standard, this requires licenses for all physical cores on the server (subject to a minimum of 8 core licenses per physical processor and a minimum of 16 core licenses per server). If you license by virtual machine, each edition permits use in a single virtual machine. You may license by virtual machine under subscription licenses or licenses with active Software Assurance only, and each virtual machine must be
allocated a number of core licenses equal to its virtual core count, subject to a minimum of eight licenses per virtual machine and 16 per customer.

Are Windows Server Containers with Hyper-V isolation and Windows Server containers without Hyper-V isolation OSEs?

Yes. Both container types meet the definition of OSE: all or part of an operating system instance, or all or part of a virtual (or otherwise emulated) operating system instance which enables separate machine identity (primary computer name or similar unique identifier) or separate administrative rights, and instances of applications, if any, configured to run on the operating system instance or parts identified above. A physical hardware system can have one physical OSE and/or one or more virtual OSEs.

If I have a server licensed for Windows Server Standard , how can I increase my virtualization rights?

With the Windows Server Standard edition licensing model, the customer can expand the virtualization capacity of their licensed server in three ways (note: for MPSA customers, “stepping up” is done with transition licenses):

1. Purchase Step-Up licenses for Datacenter edition. “Stepping up” from Standard edition licenses to Datacenter edition licenses gives rights to run unlimited Operating System Environments (OSEs) or Hyper-V containers on the licensed server. To use this benefit, the underlying Standard licenses must have Software Assurance. For example, a 2-processor server with 10 cores per processor requires 20 core licenses with Software Assurance for Standard edition and has rights to two OSEs or Hyper-V containers. To “step up” to Datacenter, purchase 20 (in other words, ten 2-packs of core licenses or one 16-pack and two 2-packs of core licenses) Software Assurance Step-Up licenses for Datacenter and assign them to the server.

2. Purchase additional licenses to fully relicense the server based on physical cores for Standard edition. Assigning additional licenses to the same physical server gives rights to run additional OSEs or Hyper-V containers on the licensed server. The server must have the correct number of licenses assigned to it to ensure coverage of all OSEs or Windows Server containers with Hyper-V isolation running at any given time.

   For example, a 2-processor server with 8 cores per processor requires 16 core licenses for Standard edition and has rights to two OSEs or two Hyper-V containers. For each additional two OSEs or two Hyper-V containers the customer wishes to use, an additional 16 core licenses (in other words, eight 2-packs of core licenses or one 16-pack of core licenses) must be assigned to the server.

3. License additional virtual machine capacity by virtual machine. This option is available for customers with subscription licenses or licenses with Software Assurance only. It requires a number of licenses equal to the virtual cores allocated to the virtual machine, subject to a minimum of eight licenses per virtual machine and 16 per customer.

How do I determine whether Standard or Datacenter edition is more economical?

The number of core licenses required depends on the number of physical cores on the server, as well as the number of Operating System Environments (OSEs) or Windows Server Containers with Hyper-V isolation that you will be running.

For a server with 13 or more OSEs or Windows Server Containers with Hyper-V isolation, Datacenter edition is recommended:

1. Datacenter core licenses: For each server, the number of core licenses required equals the
   number of physical cores on the licensed server, subject to a minimum of 8 core licenses per
   physical processor and a minimum of 16 core licenses per server. Core licenses are sold in 2-
   packs as well as optional 16-packs (for convenience). Eight 2-packs and one 16-pack are priced the same and provide equivalent use rights. However, point counts may vary, so MPSA and Open Volume customers should assess which pack sizes work best for them.
2. Datacenter OSEs: When all physical cores on the server are licensed, Datacenter provides
   rights to use unlimited Operating System Environments (OSEs) or Windows Server Containers with Hyper-V isolation and unlimited Windows Server Containers without Hyper-V isolation on the licensed server.

For a server with fewer than 13 OSEs or Hyper-V containers, Standard edition is recommended:

1. Standard core licenses: For each server, the number of core licenses required equals the
   number of physical cores on the licensed server, subject to a minimum of 8 core licenses per
   physical processor and a minimum of 16 core licenses per server. Core licenses are sold in 2-
   packs as well as optional 16-packs (for convenience). Eight 2-packs and one 16-pack are priced the same and provide equivalent use rights. However, point counts may vary, so MPSA and Open Volume customers should assess which pack sizes work best for them.
2. Standard OSEs: When all physical cores on the server are licensed, Standard edition provides rights to use two Operating System Environments (OSEs) or Windows Server Containers with Hyper-V isolation and unlimited Windows Server Containers without Hyper-V isolation on the licensed server. For each additional two OSEs or two Windows Server Containers with Hyper-V isolation the customer wishes to use, an equivalent number of additional core licenses must be assigned to the server as specified in C, above.

If I want to use the software from an earlier Windows Server version or edition, what are my options?

If the customer has licenses for the latest version of Windows Server Datacenter edition, they have the right to downgrade software bits to any prior version or lower edition. If the customer has licenses for the latest version of Windows Server Standard edition, they have the right to downgrade the software to use any prior version of Enterprise, Standard, or Essentials editions.

The ability to downgrade does not change the licensing or support terms under which a customer can use the product; the rights for purchased product (in other words, terms for the licensed version of Windows Server) apply. This means that core-based licensing and use rights apply to the version the customer downgrades to and that the virtualization rights do not change. Below are a few examples.

Can Windows Server licenses be moved between my on-premises servers and Azure?

Yes. Customers can deploy on-premises images in Azure using the Azure Hybrid Benefit. See question 23 for more information about the Azure Hybrid Benefit for Windows Server.

Can Windows Server licensed under Core Infrastructure Server (CIS) Suite be used in Azure?

Yes, customers can use Windows Server licensed within CIS on Microsoft Azure under the Azure
Hybrid Benefit. Additionally, Server and Cloud Enrollment (SCE) customers can leverage their SCE Management Rights to use System Center to manage such virtual machines running on Azure under the Azure Hybrid Benefit.

Can Windows Server images be used in Azure under the Azure Hybrid Benefit for Windows Server?

Yes. Under the Microsoft Azure Hybrid Benefit for Windows Server, customers with Windows Server licenses covered with Software Assurance may upload and use their own Windows Server images on Microsoft Azure through Azure Virtual Machines (“Base Instances”). Customers pay only for the cost of service utilization of the Base Instances.

Each Windows Server processor license with Software Assurance, and each set of 16 Windows Server core licenses with Software Assurance, entitles customers to use Windows Server on Microsoft Azure on up to 16 virtual cores allocated across two or fewer Azure Base Instances. Each additional set of 8 core licenses with Software Assurance entitles use on up to 8 virtual cores and one Base Instance.

Azure Hybrid Benefit provides additive rights to deploy and use the software when exercised in
connection with Datacenter licenses. Azure Hybrid Benefit provides alternative rights when exercised in connection with Standard Licenses. When Windows Server Standard licenses are used under Azure Hybrid Benefit, they are deemed “assigned to Azure” and are subject to license reassignment limitations.

Can System Center license be used for managing Windows Server virtual machines running on Azure?

Yes. Under the License Mobility through Software Assurance benefit, customers can assign their
System Center licenses to manage a Windows Server instance running on Azure.

Can System Center licensed under Core Infrastructure Server (CIS) Suite be used in Azure?

No. System Center software licensed under CIS Suite may not be used in Azure. System Center does not offer License Mobility as a component product within the CIS Suite product. Server and Cloud Enrollment customers should refer to question 26.

Can SCE customers use System Center licensed under Core Infrastructure Server (CIS) Suite in Azure?

Yes. Server and Cloud Enrollment (SCE) customers are eligible to use System Center software licensed under CIS Suite to manage their qualifying virtual OSEs running within Microsoft Azure. Eligibility requires that the customer meet enrollment coverage requirements and be licensed for and using CIS Suite to manage OSEs in their own data centers. Each CIS Suite processor license covered by the customer’s SCE, and each set of 16 CIS Suite core licenses covered by the customer’s SCE, entitles the customer to manage up to 10 qualifying virtual OSEs running within Microsoft Azure. For additional details, refer to the CIS product entry in the Product Terms (Server and Cloud Enrollment (SCE) - Right to manage OSEs on Microsoft Azure under CIS Suite Licenses).

Are CALs or External Connectors required for Windows Server instances running on Azure?

Base access licenses (CALs and External Connectors) are not required for use of Windows Server on Microsoft Azure. Remote Desktop Services (RDS) CALs, however, are required when using corresponding functionality. RDS User CAL and User SL have Extended Rights to use its RDS User CALs and User SLs with Windows Server software running in OSEs dedicated to its internal use on either Microsoft Azure Platform Services or the shared servers of a License Mobility through Software Assurance Partner for which it has completed and submitted the License Mobility Validation form. Customers may also cover access by third parties, as permitted under the OST, or as permitted under Software Assurance Self-Hosting rights using Subscription Access Licenses (SALs) acquired under a Services Provider License Agreement.

Are there any changes to the licensing model for Windows Server Essentials?

No. Windows Server Essentials will continue to cover a single server with up to two physical
processors. It does not require Windows Server CALs, but is limited to 25 user accounts. However, Windows Server 2022 Essentials is only available through OEM licensing.

Am I permitted to move Windows Server licenses to other cloud providers’ environments?

Yes. Windows Server subscription licenses or licenses with active Software Assurance allocated by virtual machine based on license minimums may be moved to Authorized Outsourcers’ clouds (on shared or dedicated servers). An Authorized Outsourcer is generally any cloud provider who is not a Listed Provider or using a Listed Provider for data center services. For more information about Authorized Outsourcers, refer to the Product Terms.