VMware or Hyper-V? Part 2: VM Operating System Licenses

July 17, 2017 | Ken Leoni

In our last post we looked at some of the environmental factors that play into a choice between VMware and Hyper-V: required OS support, hardware compatibility, and ease of use. This post and the next will look at what is often the deciding factor in selecting a hypervisor:


Software costs can be broken down into the cost for advanced hypervisor features and the cost for licensing virtual machine operating systems. The basic ESXi and Hyper-V hypervisors are free, but you will pay for advanced hypervisor functions – and that will be the topic of the next post. In this post, we’ll take a look at the cost of licensing Windows operating systems running on virtual machines.

As of Windows 2016, Microsoft has changed its licensing model for Windows virtual machine operating systems (OSEs) in Standard and Datacenter edition to a core based model. The three Windows Server 2016 Editions which focus on virtualization are:


Hyper-V Server 2016

Windows Server 2016 Standard Edition

Windows Server 2016 Datacenter Edition

Hyper-V installation

Console install (command line only – no GUI)

Installed as server role in Windows Server 2016

Installed as server role in Windows Server 2016





Maximum number of processors

No processor restrictions

2 processors – 16 cores

2 processors – 16 cores

Available licenses for virtual machine operating systems

No VM OSE licenses

2 VM OSE licenses

Unlimited VM OSE licenses

Please note – prices will vary depending on your licensing agreement and reseller.

Hyper-V Server 2016 is the Windows equivalent of VMware’s ESXi: it is free, and can be used for basic VM management functions. It is a console installation, with just a command prompt as an interface, so management is done either remotely, or through the command line. There are no licenses for virtual machines OSEs provided with Hyper-V Server 2016, so an OSE license will need to be provided for every Windows virtual machine run on Hyper-V Server 2016.

Windows 2016 Standard and Datacenter Edition provide two advantages over the minimal Hyper-V 2016 Server Edition. First, with Hyper-V installed on Standard or Datacenter, you have access to Hyper-V management tools directly on the same server running Hyper-V. Second, both Editions include licenses for virtual machine OSEs: Standard Edition provides licensing for 2 VM OSEs, and Datacenter Edition provides licensing for an unlimited number of VM OSEs.

However, the virtual machine OSE licenses provided by Standard and Datacenter Editions are not restricted to using Hyper-V: they can be used with any hypervisor. Standard and Datacenter licenses are assigned to hardware – specifically they are assigned to cores. It doesn’t matter if the hypervisor running on the processors is Windows 2016's Hyper-V, or VMware's ESXi, or Red Hat’s RHEV – the virtual machines managed by the hypervisor can use the licenses provided by Standard or Datacenter Edition.

There are, of course, additional rules as to how Standard and Datacenter Edition licenses can be applied. Microsoft provides a pricing information and FAQ PDF that outlines the basics of Standard and Datacenter Edition licenses:

  • The Standard/Datacenter Edition licenses are core based and each will apply to 2 processors with 8 cores each. If your server has more than 16 cores, you will need to apply enough additional Edition licenses in 2 core increments to cover all the processors
  • You cannot mix Standard and Datacenter licenses
  • If a virtualization host has multiple Standard Edition licenses, you get 2x VM OSE licenses for each Standard Edition license
  • If a virtual machine moves from one virtualization host to another, the virtual machine OSE license does not move with it – since the OSE licenses for the virtual machines are tied to the processor, the new virtualization server must also have a license for the OSE for that virtual machine. This is not an issue if both virtualization hosts have the unlimited Datacenter Edition licensing for VM OSEs.

Licensing is a spectacularly confusing topic, and you need to carefully read the fine print of your current licensing agreement to determine exactly which and how many Windows operating systems you’re allowed to run as virtual machines. However, the costs will be the same regardless of the hypervisor in use. When comparing overall software costs between Hyper-V and VMware, licensing for advanced virtualization features will be the primary factor - and we will look at that in our next post.


 vSphere vs Hyper-V comparison matrix
Download the comparison:   vSphere vs Hyper-V

Both technologies provide redundancies that maximize your up-time and that allow you to squeeze out the most performance

Which is better and how do you decide?



Additional posts in our VMware or Hyper-V series:

Part 1: Which hypervisor will work best for your environment?
Part 3: Virtualization Licensing Costs

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