Windows Server 2016 Licensing Explained

Microsoft Windows Server 2016 became officially available recently on 9/26/2016 and as I'm sure you have heard the licensing changed from a per processor model to a per core model.

Before you read any futher here's a simple thing to keep in mind when purchasing this new licensing model:

Once you have enough cores purchased (16 core minimum) to cover the metal, every 8 packs (16 cores) of licensing cover 2 more virtual machines.

The first thing that people have had a hard time understanding is the new "Per Core" licensing and even with Microsoft's own explanation it seemed impossibly hard to understand so I'm going to try to break it down simply so everyone can get a quick grasp on how it works.

FACT #1
Server 2016 licensing is sold in 2 core packs.  The very minimum no matter how small your server is a 16 core purchase.  Microsoft says this would be the same cost as Server 2012 R2 Standard licensing.

EXAMPLE:
You purchased a small server for a business that has only 4 cores and 8G RAM.  The correct licensing for Server 2016 would be 16 cores purchased.

FACT #2
You MUST cover all cores on the server prior to taking into consideration the number of virtual machines if it is a VM host.

EXAMPLE:  
Your server has 2 processors that are 12 cores each.  Total of 24 cores.  You plan on only running 2 virtual machines on this server.  You must purchase 12 x 2 packs of Server 2016 core licensing.  If you move up to 4 virtual machines guess what?  You're going to need to purchase another 4 packs of licensing to cover the next two.  This is a total of 16 packs and every 8 packs = 2 VMs.

FACT #3
After you have covered the number of cores on the physical server, every 8 packs (16 cores of licensing) after that will give you two more virtual machines of no more than 8 cores each.

EXAMPLE:
Your plan is to run 5 virtual machines on a server with 2 x 8 core processors.  You must purchase the initial 8 packs (16 cores) to cover the server's physical processors.  Then from there you must purchase another 8 packs for the next 2 virtual machines and then another 8 packs for the 5th virtual machine leaving you 1 more virtual machines you can build without needing more licensing.

So far this news isn't extremely terrible but there are two more things on top of all of this you need to know.

1. Once you approach the 8th virtual machine, it becomes more cost effective with the new licensing model to purchase the Datacenter edition.  The cost is going to be very high for customers so virtual server sprawl is going to start being a real issue.

2.  Microsoft says you MUST license a virtual host to carry all of your virtual machines in the event of a failure of one host.  This is a massive cost purchase in the event of a multi-host virtual environment.

Let me explain that one a bit better.  You have a decent sized business with three VMware hosts.  Each host has 2 x 10 core processors and you're running 24 virtual machines evenly spaced out over all three hosts so you have a 3 x 8 scenario with your virtual machines.

Microsoft now says you must purchase not just a total of 96 packs (remember 2 cores per pack) but you must purchase a total of 96 packs x 3 hosts in the event that two of them were to go offline and you have to run all of your VMs on one host and because you can vMotion them around.  This simply means a business would now need to purchase 288 cores of licensing to be properly licensed.

I know this is a bit wordy but I hope it makes a little better sense than all of the other confusing information out there about it.  I'm confident this is correct as our licensing supplier has been through the offical training and this was how it was explained to me.

Good luck.