Microsoft changed their licensing policies at the end of September 2016. I strongly recommend you learn the OS licensing intricacies to avoid getting in a trouble.


In fact, most of our posts address technical issues. Licensing, in its turn, is a legal matter. I am not a lawyer and I have not consulted with a lawyer on the issues covered in this post either. Here, I intend to discuss the concepts of a specific licensing detail. Please note that the post neither gives a legal advice nor interprets the policy. Neither I nor Altaro software are authorized for legal consulting, thereby, do not view the post as such. This implies that none of us can be held responsible for any negative outcomes related to the usage of any our post’s contents, including the cases when it is thought to be an error on our part or a misunderstanding on yours. If any questions arise, please, take your time and get official answers to avoid being fined for policy violation. For any inquiries, contact Microsoft directly, or your reseller. Authorized resellers have employees authorized to answer licensing questions.

You can also check the Product Use Rights document, the most transparent material published by Microsoft on the subject so far.

OEM Licenses

The main difference between OEM and Volume Licenses is that the former are not transferable. This post overviews Volume Licenses, an agreement that users make with Microsoft through resellers. OEM licenses, in their turn, can be customized by any equipment manufacturer, thus, rules may vary. Regarding this fact, do not expect an OEM license to work in the same way as a Standard Volume one.

Microsoft Windows Server Products

Apart from licensing policies, Microsoft has changed their product line. Now, Windows Server 2016 is available in three main editions:

  • Essentials is an ideal solution for small businesses comprising up to 25 users and 50 devices;
  • Standard suits perfectly for physical systems with insignificant virtualization;
  • Datacenteris designed for cloud-based environments and systems with high virtualization level.

There are also other editions available:

  • MultiPoint Premium Server enables the multiple users accessing one PC. Bear in mind that there is only academic license available;
  • Storage Server is available only in the OEM channel for dedicated storage systems.

Now, let’s shed light on the licenses for small business. In Windows Server 2016, Microsoft has excluded the Foundation license, having left only Essentials one. Essentials provides access for up to 25 users and 50 devices. Importantly, the license does not require client’s access.

Foundation exclusion does not remarkably impact users since the option was available only on the OEM channel. End-users got it supplied only with a ready server. Essentials, in its turn, could be purchased in terms of corporate licensing and used with the already available hardware.

What’s new in Windows Server 2016

Windows Server 2016 differentiated Standard and Datacenter licenses. The functions available to Datacenter users are mentioned below:

  • New storage functions (including Storage Spaces Direct and Storage Replica)
  • New shielded Virtual Machines
  • The new network stack

The features enabled in new editions are designed for virtual environments. It should also be noted that Windows Server 2016 supports Docker-powered Windows Server containers

Fortunately, Windows containers are available without any additional licensing and do not have any restrictions regarding the number of running instances. The storages are expected to be available on Pro and Enterprise Windows 10 version, starting from the 1607 (Anniversary Update) one.

At this point, I’d like to mention Nano Server, a nice alternative to Windows Server. It is restricted Windows Server version without a GUI. It serves for remote-administrated services.

The Rule for Windows Server Licensing

Unlike Windows Server 2012, in Windows Server 2016, users are charged for each physical processor’s core, instead of the entire physical processor. For instance, you could purchase a single license for a 16-core processor before instead of buying multiple licenses for several processors with fewer cores.

Now, every core needs to be licensed separately. This approach towards licensing seems clear if the modern trends in processor manufacturing are considered. Compute power is enlarged rather intensively (by using multicore processors) than extensively (by employing multiple physical sockets).

New CPU licensing Windows Server 2016

The license for processors comprises at least 8 licensed units, while the one for servers includes over 16 units. The image below describes how does Windows Server 2016 licensing work.

Windows Server 2016 CPU licensing requirements

Windows Server 2016 server licensing requirements

Each couple of cores is licensed. Now, one paired license costs equal the 1/8 of Windows Server 2012 license. Regarding this fact, new rules impact only users with powerful multicore processors.

difference between windows server 2012 and 2016 license price

The Hyper-V Server License

Virtualization licensing policies remain unchanged. The Standard license enables to have two VMs deployed having the host system occupied entirely by their servicing. For more virtual machines deployment, users need additional licensing of all their processors’ cores regarding the current policies.

Windows Server 2016 Standard VM licensing

Eventually, let’s discuss the Datacenter edition. First, it is seven times more expensive than the Standard one. The difference in prices is so huge that you will pay less even having almost 14 VMs deployed in the Standard edition. I recommend you to consider Datacenter license only when you intend running more than 10 VMs.


This article covers the most significant changes in Microsoft Windows Server licensing. Now, the OS is available in three editions: Essentials, Standard, and Datacenter. Processor licensing has also been affected. In Windows Server 2016, users are charged for each pair of cores. Such licensing policy affects only users with powerful multicore processors (one paired license costs as 1/8 of Windows Server 2012 license). Virtualization policies remain unchanged.

More Questions

I usually am happy to discuss some issues with you. However, we’re not going to be that open in this particular case. I am not authorized to provide legal advice since I do not want anyone who reads this to get in trouble. The only purpose of this post is to clear up the initial confusion that many people have on the subject. If I haven’t explained it clear enough, talk to a licensing expert. Run it through your legal department. Licensing is a confusing topic and not worth making mistakes on it. Get an expert on the phone, explain what you have and what you want to accomplish, and you’ll have a legitimate answer shortly.