Report by: Rob Horwitz

Posted: September 21, 2009

Remote Desktop Services (RDS), formerly called Terminal Services, has seen notable licensing changes in Windows Server 2008 R2. While the same basic licensing model applies, license names have changed, new capabilities have been bundled in, and prices have risen modestly. Furthermore, organizations will be able to license some capabilities of RDS through a separate set of Virtual Desktop Infrastructure (VDI) Suites. RDS remains valuable for simplifying application and desktop management, so organizations will want to evaluate licensing options carefully in the wake of the changes—particularly if they want to use App-V to deploy applications on older versions of the product.

When Customers Have to License RDS

Although it's included as part of the Windows Server code, RDS is licensed separately from the server OS. Uses for RDS have grown, especially over the past two years, and customers will have occasion to use (and license) RDS in three major scenarios.

Server-hosted sessions. RDS enables organizations to run Windows desktop applications on a server and allows users to access these applications from PCs or thin-client terminals. This architecture, which Microsoft sometimes calls presentation virtualization, is analogous to the old mainframe model, where a central computer handles the entire processing load, including presentation, and the user device (e.g., terminal) merely provides an interface for working with applications. This centralizes application deployment and maintenance and enables application access from lower-cost client devices, including older PCs. However, some Windows desktop applications may not work well in a multiuser environment, and users have limited ability to customize their remote desktop environment. (In particular, they cannot install desktop applications on their own.) Session hosting was first introduced as Windows NT Server 4.0 Terminal Services more than a decade ago.

Desktop computer access. RDS includes a secure gateway capability that, among other things, enables remote users to connect from outside the corporate firewall to their (idle) personal computer at work without using a virtual private network (VPN) connection. This allows access to internal corporate applications and data without the general corporate network access granted by a VPN. It gives users access to their personal computing environments from anywhere and does not require dedicated server hardware or multiuser-aware applications as do server-hosted sessions. This capability was introduced in Windows Server 2008.

Server-hosted virtual machines (VMs). RDS can play an important role for customers deploying a VDI, where VMs running Windows client OSs execute on a Windows Server-based server. VDI has similar advantages to server-hosted sessions, but with the ability to run applications that aren't compatible with a multiuser environment, and with the option for different users to have different OS images. However, it makes less efficient use of the server hardware than server-hosted sessions, because each VM runs a separate instance of the client OS and applications. RDS provides the ability to provision and connect users to VMs, making VDI easier to set up and administer. This capability is new to Windows Server 2008 R2.

The scenarios above rely on the four main RDS-related components included in Windows Server. (For a rundown of those components, see the sidebar "Remote Desktop Services Components".)

What Hasn't Changed

While the names of the underlying licenses have been modified, RDS licensing and pricing remains largely unchanged in Windows Server 2008 R2.

Licensing model remains the same. Use of RDS by an organization's employees or contractors must be licensed by purchasing an RDS client access license (CAL) for each user or for each access device (typically a PC). Users other than employees (such as business partners) can be licensed with an External Connector (EC), which permits an unlimited number of nonemployees to access a single physical server. However, the names of the licenses have changed; for example, what was once called a Terminal Services (TS) CAL is now called a RDS CAL.

No new CAL or EC required. Microsoft server products typically require a new CAL whenever a new version ships. However, Windows Server 2008 R2 does not require new CALs or ECs, which is consistent with the precedent set with Windows Server 2003 R2, which shipped in Dec. 2005. This applies to RDS as well: Windows Server 2008 Terminal Services CALs and ECs are valid for access to RDS in Windows Server 2008 R2. Note that customers who bought CALs prior to Sept. 1, 2009 (the date of the name change), own "Windows Server 2008 TS CALs," and customers who make purchases after that date own "Windows Server 2008 RDS CALs." Despite the different names, the two licenses are identical in the rights they convey (as is true for the respective ECs as well).

Prices stable until the end of the year. The Open Business price (which reflects the maximum price a business customer would pay through volume licensing) for the Windows Server 2008 RDS CAL remains US$81 and the Windows Server 2008 RDS External Connector continues to be priced at US$8,080 per physical server. However, Microsoft intends to raise these prices by approximately 5% at the start of 2010.

License compliance features built in. Unlike most Microsoft server products, RDS (and its Terminal Services predecessors) includes a license manager component that records CALs in electronic form. When CALs are assigned per device, RDS can enforce compliance by blocking unlicensed client devices. When CALs are assigned per user, it can assist in compliance by generating a report detailing the number of unique users that have used RDS and comparing it with the number of user CALs installed on the system.

RDS Licenses Application Virtualization

Concurrent with the name change, RDS CAL and EC license rights have expanded to include the right to use Application Virtualization (App-V) to install applications in the RDS Session Host (called the Terminal Server role in prior versions of Windows Server).

App-V enables an organization to install each application or application version in an isolated environment with its own copy of shared Registry settings, files, DLLs, and similar resources. On RDS servers hosting sessions, App-V helps avoid conflicts between applications, allows multiple versions of the same application to run in the same Terminal Server session, and enables organizations to patch applications without having to force all users to log off the server.

Prior to Sept. 1, 2009, customers using App-V to deploy applications on a Terminal Server had to buy an US$18 "Application Virtualization 4.5 for Terminal Services CAL" for each user or device, or a US$1,791 "Application Virtualization 4.5 External Connector for Terminal Services" for each server. (Prices quoted are Open Business.) These App-V-related licenses for Terminal Services have been abolished, and the Windows Server 2008 RDS/TS CAL and EC now incorporate the rights to use App-V to deploy applications into an RDS Session Host. This move, a modest licensing simplification and price cut, was likely made to help the company highlight a capability present in Microsoft's product line—presentation virtualization—but absent from virtualization competitor VMware's portfolio. It is also likely to expand the number of customers using App-V.

Note that this does not affect the use of App-V to deploy applications to client PCs or server-based VMs running a desktop OS. These uses still require licensing the Microsoft Desktop Optimization Pack (DOP), a set of PC management utilities available on a subscription basis to organizations that have Software Assurance (SA) maintenance and upgrade rights for their Windows client OS licenses.

Customers who have SA coverage as of Sept. 1, 2009, on previously purchased App-V for TS CALs have the option to convert them into Windows Server 2008 RDS CALs—four App-V for TS CALs convert to one RDS CAL. Similarly, four App-V for TS ECs covered under SA can be converted into one Windows Server 2008 RDS EC.

Customers wanting to license use of App-V to deploy applications on Terminal Servers running Windows Server 2003 R2 or earlier versions will need to act quickly because App-V for TS CALs and ECs will no longer be sold after Oct. 31, 2009. Thereafter, such customers will have no choice but to go the far more expensive route of upgrading to Windows Server 2008 RDS CALs and ECs.

Alternative Way to License RDS

Starting Oct. 1, 2009, Microsoft is offering two subscription-based suites aimed at customers deploying a virtual desktop infrastructure managed with Microsoft technologies. Besides licensing RDS functionality, both suites include rights to use DOP and rights to manage components of a VDI running on a Windows Server using three System Center products (Configuration Manager, Operations Manager, and Virtual Machine Manager). The annual per-device fee for the Virtual Desktop Infrastructure Standard Suite (VDIS) is US$21 and for the Premium Suite (VDIP) is US$53. While the Premium Suite includes the right to use all RDS features, the Standard Suite allows use of RDS only in the context of a VDI deployment. For example, the Standard Suite doesn't license remote access to desktops via the RDS gateway or applications running on an RDS Session Host. Furthermore, only the Premium Suite includes the right to use App-V to deploy applications into an RDS Session Host.

Note that customers using RDS for purposes other than VDI are much better served using the traditional licensing method: purchase of RDS CALs.


Microsoft's RDS licensing page is

Windows Server 2008 R2 licensing, packaging, and pricing is covered in "Windows Server 2008 R2 Preserves Licensing".

The Windows Server 2008 R2 pricing page is located at

The Desktop Optimization Pack and App-V are explained in the July 2009 Research Report, "Managing Clients: The Desktop Optimization Pack 2009."

The benefits of using App-V in conjunction with Terminal Services is explained at

Rules for converting App-V for TS CALs to RDS CALs are covered in the "Servers Pool" chapter of Microsoft's Sept. 2009 Product List, which can be downloaded from

A technical overview of Windows Server 2008 R2 RDS is provided in "Terminal Services Renamed and Updated" on page 3 of the Sept. 2009 Update.

Overview of licensing Windows for virtual environments can be found at

Information about VDI licensing suites can be found at

Report by: Rob Horwitz

Posted: September 21, 2009