Windows 2008 R2 Hyper-V VM Licensing (Standard, Enterprise, Datacenter) Windows 2008 R2 Hyper-V VM Licensing (Standard, Enterprise, Datacenter)

10 Jul by Eric Siron     11     Hyper-V Articles

Like a physical machine, a virtual machine running any version of Microsoft Windows requires a valid license. Microsoft has provided a mechanism by which your organization can benefit from virtualization and save substantially on licensing costs. These rules are dependent on the hardware, not the hypervisor. Therefore, you are allowed to exploit Microsoft’s virtualization licensing rights on any hypervisor that you choose, including Microsoft’s Hyper-V, VMWare’s ESXi, Citrix’s XenServer, or any other.

OEM Licensing

OEM (original equipment manufacturer) licensing deserves its own section because it has one critical difference from all other types of licensing. An OEM license is a special type of license that can only be issued by a company that sells hardware. The license is permanently bound to whatever piece of hardware it was sold with. This type is most commonly sold by system builders such as Dell or Hewlett-Packard, but they are also sometimes sold by component vendors as well. Terms vary, but in general, an OEM license is permanently bound to the motherboard of the system the license was shipped with. If your hardware came with a Windows license sticker affixed, that represents an OEM license. All other types of licenses (retail, volume, academic, etc.) are transferable. They can only be used on a specific number of systems concurrently.

Microsoft Windows Server Virtualization Rights

Each different edition of Windows Server provides unique virtualization rights.

  • Standard Edition: 1 physical machine, 1 virtualized machine
  • Enterprise Edition: 1 physical machine, 4 virtualized machines
  • Datacenter Edition: 1 physical CPU socket, unlimited virtualized machines

In a single physical host environment, these rights are very straightforward. You assign the physical license to the physical machine, and you can then install as many virtual machines running Windows Server as you are granted licenses for. If you need more licenses, you just acquire the necessary additional virtualized licenses.

Licensing Hyper-V VMs

Things get a little more complicated in multi-server and cluster environments. The physical licenses are assigned to a particular piece of hardware and their virtualization rights are bound to the license. Therefore, you cannot split them across different pieces of hardware.

Hyper-V-Cluster Licensing

However, if all of the above virtual machines are only running one on physical server and both physical servers are connected in a cluster, then the deployment can be covered by a single license. This presumes that if the physical servers are running Windows as their base operating system that the server with no virtual machines is not providing any other Windows services. If it is not, or if it is running a different operating system, then there is no cause for concern. The only other potential restriction is that the license cannot be OEM, since that type of license is never transferable under any circumstances. If the physical server running the virtual machines should fail, the cluster service will bring all of the virtual machines up automatically. Since there is no time in which the virtual machines are split across the two physical servers, this is a completely valid use of your license.

Hyper-V NON OEM Licensing-3

Note that in the above scenario, if you spot the impending failure and transition the virtual machines by LiveMigration, you are out of license compliance for the entire time that any active virtual machine is running on a different physical server than the others.

Assigning and Tracking Licenses

There is no real mechanism by which you assign the licenses in the above scenario. If you install Windows Server directly to the physical hardware, it will need to be activated but it will only take one license key. If you use native Hyper-V or a different hypervisor, the physical licenses are not tracked at all. Similarly, the virtual machines will each need to activate as well, but they will be completely oblivious as to whether or not they are running on a physical host that is in compliance. It is up to you to ensure that you are properly licensed for all possible scenarios.

Downgrade Rights

Depending on the license that you purchase, you may have “downgrade” rights. These are most commonly found in volume licensing, so if you have Open or Select then you probably qualify. For information on retail, OEM, and other license types, consult your license agreement or vendor for more information. With downgrade rights, you are allowed to use older Windows operating systems and lower editions. So, if you have a pair of dual core physical servers in a cluster and you’ve purchased Windows Server 2008 R2 Datacenter Edition for four CPUs, you are allowed to install any edition of Windows Server from 2008 R2 back to 2003 R2 and in any edition. If you’ve acquired a single Windows Server 2008 R2 Enterprise Edition license, the four virtual machines can be Standard Edition or Enterprise Edition and can also be any version back to 2003 R2.

Microsoft Windows Client Virtualization Rights

Microsoft does not offer a comparable program for desktop operating systems such as Windows 7. However, if you have Software Assurance for your desktop operating system, it allows you to connect to virtualized desktops within a Virtual Desktop Infrastructure (VDI) environment. If you don’t have Software Assurance, you may purchase a Virtual Desktop Access (VDA) license, which allows the licensed device to connect to and use a virtualized instance of a Windows desktop operating system. The virtualized instance of the Windows guest must have its own license and any desktop used to access it must also be properly licensed.

Have any questions?

Leave a comment below!


Backing up Hyper-V

If you’d like to make backing up your Hyper-V VMs easy, fast and reliable, check out Altaro Hyper-V Backup v4. It’s free for up to 2 VMs and supports Hyper-V Server 2012 R2! Need more? Download a 30-day trial of our Unlimited Edition here:


Receive all our free Hyper-V guides, checklists and ebooks first via email!

(Don’t worry, we hate spam too!)

Eric Siron

I have worked in the information technology field since 1998. I have designed, deployed, and maintained server, desktop, network, and storage systems. I provided all levels of support for businesses ranging from single-user through enterprises with thousands of seats. Along the way, I have achieved a number of Microsoft certifications and was a Microsoft Certified Trainer for four years. In 2010, I deployed a Hyper-V Server 2008 R2 system and began writing about my experiences. Since then, I have been writing regular blogs and contributing what I can to the Hyper-V community through forum participation and free scripts.

11 Responses to “Windows 2008 R2 Hyper-V VM Licensing (Standard, Enterprise, Datacenter)”

  1. Daren Friday

    In your final senario you have 2 physicals and only a single Enterprise licence.

    Can I use a single Enterprise licence on both physical servers?

  2. Eric Siron

    @Daren: In that scenario, it is legal because all of the virtual machines are running on a single host. As long as the other host is only there for failover, it does not need a license. If virtual machines are ever running on both hosts, they must both be licensed.

  3. Praveen Prakash

    Please suggest me the licensing structure to run 7 servers on one physical which also requires a secondary server with the same number of servers as a failover.

  4. Joe Bellman

    I found this article very useful and demonstrative. Best thanks for it. However, could you please reconfirm/explain in more details that I really just need one license of Microsoft Windows Server 2012 Datacenter (respective two VLs of Microsoft Windows Server 2012 Standard for my scenario – cheaper solution for 4 VMs on one physical host with no intention to increase the number of VMs in future) to create a two node fail-over cluster? I am a little bit confused. In other articles about Microsoft fail-over clustering found across Internet I read I would always need a proper Microsoft Windows license for every particular physical host being a member in a cluster. It would mean that your scenario of two clustered physical servers with 4 VMs running on one host and covered by just one license of Windows Server 2012 Datacenter would be under-licensed (one physical host running Windows Server 2012 software has no license at all). Is there a chance to find a correct answer right on the Microsoft web site? Could you cross-refer to that information there? I am still convinced of a need to assign two licenses when running two physical servers in a fail-over cluster. Or am I wrong? Could you describe why? Many thanks for your nice support and explanation.

    • Eric Siron
      Eric Siron

      Hello Joe,
      You cannot ever use a single license purchase to cover active guests on more than one physical computer. Period. The scenario you see above has zero running guests on the second host. If host one crashes, the cluster will automatically start those guests on the second host. That scenario is a failover-only build. If you Live Migrate in that scenario, you are out of licensing compliance.
      If you are going to use four virtual machines in a two-node cluster and you want to be able to freely migrate them, you’ll need four Standard licenses, two per host. This will give you enough licensing to run all four virtual machines on either host any time you want. I would not purchase Datacenter because it would cost too much.
      Microsoft details licensing in its Product Use Rights document, which is clear as mud for most people. I always recommend calling Microsoft licensing or your Microsoft license reseller whenever you have questions.

  5. Joe Bellman

    Hello Eric,
    I do appreciate your comments very much and understand them completely. Anyhow, a little confusion still exists of the scenario concerned. It is pretty clear there are no running guests on the second host. But, must the second host not be up and running an OS for a functional fail-over cluster configuration? If it is not, there is no need to have another Microsoft Server 2012 Datacenter/Standard license(s) for this computer, I do agree with you. I am sorry about my poor experience with fail-over clustering. Could you provide some explanation for that? As I understand from your post, if host one crushes, the host two will be powered up just then and start Microsoft Windows OS with its all four VMs. Am I right? In this case there is really no need to have two licenses (one for each server). But, if the second host is up all the time a cluster exists, then you must have a second license for that host to comply with the Microsoft’s License Agreement to my knowledge. What do you think? Please provide explanation for about what I am still rather confused. It is quite crucial for me to be sure about the number of licenses I would need for my scenario that is exactly the same like yours. The only difference would be the type of the license I would assign, i.e. I am going to purchase two licenses of Microsoft Windows Server 2012 for one host only that will allow me to run 4 VMs on that host at the same time, but would be very happy if the second host in the fail-over cluster would need no additional licenses (as it is written in your article). Please provide some help just one more time. Once again I am very sorry for troubling you, and many thanks for your nice support in advance.

    • Eric Siron
      Eric Siron

      The pictured scenario works if the only thing installed is Hyper-V Server. The post wording is poor because it implies that you can run Windows Server. If you install Windows Server on the hardware then you must license it.
      If you go with one licensed host and one empty host and a crash occurs, the licenses are transferred from one host to the other. They have to stay there for 90 days unless there was a hardware failure such that the original host will not be recommissioned.
      If you’re only going to have four VMs and you can afford a Datacenter license, then get four Standard licenses instead, two per host. It’s cheaper and will let you move the guests around all you want.
      If this is not easily understood, please get a licensing expert from a vendor involved. They can offer verification and liability, meaning that if they say you’re licensed properly and it turns out they’re wrong, you’ll have some recourse. If my advice isn’t clear enough, you’ll be on your own.

  6. Joe Bellman


    I am very happy you replied to all my posts, and thank you very much for your explanation. Now everything is clear. I should have better read your article and be aware of the fact your scenario is based on the Microsoft Hyper-V Free Server 2012. But looking just at the picture evokes conviction both physical servers/hosts are running Microsoft Server 2012 Datacenter OS instead. I am sorry for having overlooked this fact.

    Best regards!

    • Eric Siron
      Eric Siron

      As I look at it, the article really could be a lot clearer. When I get some time I’ll come back and revise it.

  7. Raja Chaudhuri

    Hi Eric,
    I have purchased 1 windows 2012 Standard License. My hardware is of 2 CPU and 64 GB of RAM. I have installed 2 VMs onto the hyperV of windows 2012. Now I want to install windows 2008 R2 onto those VMS. My questions is how can I activate those windows 2008 R2 Servers as I do not ahve any key for those. I am only having the Activation Key for the windows 2012 Standard Server. Any supporting document you suggest for these licensing and activation process.
    Thanks in advance.

    • Eric Siron
      Eric Siron

      Start with your reseller. Tell them you need downgrade keys for the license you purchased. They might redirect you to Microsoft, but they should have the necessary contact information. If this is a retail purchase, there may be a limitation on downgrade rights. Your reseller should be able to confirm that either way.

Leave a comment