Essentials 2012 R2 – The Role & Licensing

explodinghead2In conversation with some Microsoft folks recently we found out about some, what ill call, small print, in the EULA of Essentials and Essentials R2.

If you had previously purchased Server 2012 Standard, and exercised down grade rights to install a copy of Essentials, you may be surprised to learn that ‘to the letter of the law’ you would therefore be required to purchase Server CALs and more expensively RDS CALs if you intended to use the RWA feature to remote access client computers.

This came as a bit of a surprise to me, because i had wrongly assumed that when you downgraded to Essentials, you were therefore using Essentials and were bound by, or entitled to, use the licensing model of that OS, and what i mean by that is that you received your 25 ‘Server CALs’  and the RWA stuff was one of the benefits of the OS.

Not so. What you were actually bound by, was your Server Standard license. Meaning the appliance based nature of Essentials as a one off purchase was not being utilised. This it seems was just a general misconception of how Microsoft licensing, and downgrade rights operate, however don’t say you weren’t told.

With the release of Essentials R2, we now have the option to install Essentials as a role to an otherwise normal Standard server. The above also applies in this situation. You purchase your new Server Standard R2 license, you install Essentials as a role, and you purchase as many CALs as you need for staff in your office, and as many RDS CALs to cover how many people will be using that feature.

Where you actually install these RDS CALs is still somewhat of a mystery to me as the Licensing manager is not exposed in Essentials.

Any other surprises?

Well yes, now you mention it.

Essentials 2012 R2 also now includes the ability to be used as a Hyper-V host. The limitation here, is that you cannot enable the Essentials features, you must only enable Hyper-V and you can only virtualise one guest, that is, an Essentials R2 VM. The plus side of this is that you can use the 2012 features of Hyper-V, and have the benefits of virtualisation, and, you are still using an Essentials license so no CAL or RDS CAL requirement.

This announcement was made via the Essentials blog.

You may be forgiven for thinking – “well what is the point of that?” ww

I like using Hyper-V where possible, and this license option gives us the ability to virtualise our Essentials installs without the need to provide an additional Hyper Visor (either the Free Hyper V Server or *shudder* VMware) but still, you may feel that this is somewhat limited. Well why not apply a second license to that physical server?

Excuse me? Baking Soda?

Yes, you may also be forgiven for letting your head explode now, but you can actually apply more than one license to your server. So how do we do that?

Lets assume then, that we have our Essentials R2 box hosting our Essentials R2 Guest VM.

Essentials VM Host

We need to install a LOB app on a second server, should we purchase a second physical server? No!

We just purchase a single Server 2012 Standard R2 License, obviously.

We can then use the in place ‘transmog’ to take our Essentials installation to a Standard installation. Effectively giving us the ability to host 3 VMs on our single box.

Standard VM Host

This was also something of a revelation to me, i had again wrongly assumed that once you transmogged your Essentials server you effectively threw away that license, not so. it is still tied to your server, therefore you are still entitled to run that Essentials VM.

I sent this over to long time listener first time caller Tim Barrett who said i should simplify it with this..


So what Tim is showing us here, is how adept he is with Visio. I want to go through it again because it is still a bit of a head shrinker.

In the inner blue box we are showing our primary purchase, a single physical server, running Essentials 2012 R2, virtualised. We can do this because the Essentials PUR (Product Use Rights) allow us to virtualise Essentials on top of Essentials.

In the outer blue box, we add an additional Server 2012 R2 Standard license to our physical server. Our existing Essentials license is not affected and is still in effect. Our Essentials VM remains running, and we do not need Server CALS or RDS CALs to use our Essentials features.

With the addition of the Server license we will also add two, server 2012 guest VMS. As you probably know Server 2012 Standard includes 1+2 Virtualisation rights, however to use these VMs we DO need to purchase Server CALs for our users. One of these VMs could be for our LOB app.

Tim went one step ahead and totally confused the hell out of me for a few minutes, and added RDS CALs pointing to the last Standard VM. This of course could be used as a full RDS Server, which would indeed require RDS CALs.

Hopefully you made it this far, and you now have a clearer understanding of how to license Essentials 2012.

Key things to take away from this:

  • Essentials as a product does not require any CALs but is limited to 25 users
  • Downgrading Standard* to Essentials requires CALs & RDS CALs
  • The Essentials Role on Server Standard* does require CALs & RDS CALs
  • Essentials can be a Hyper-V Host for a single Essentials VM, no other guest VMs.
  • You can add a second OS License to a physical server

* I am using Standard to save screen space but this also applies to Data Center edition.

About Robert Pearman
Robert Pearman is a UK based Small Business Server enthusiast. He has been working within the SMB IT Industry for what feels like forever. Robert likes Piña colada and taking walks in the rain, on occasion he also enjoys writing about Small Business Technology like Windows Server Essentials or more recently writing PowerShell Scripts. If you're in trouble, and you can find him, maybe you can ask him a question.

45 Responses to Essentials 2012 R2 – The Role & Licensing

  1. Gantry says:

    Man, that’s a lot to process! So are these “OEM” licenses of Essentials 2012 thats you can buy from Newegg and the like support the “Essentials guest only VM” capability? Or just the Volume License versions? Or does Essentials 2012 R2 eliminate the “OEM” version that was in Essentials 2012?

    I may have made it even more confusing…

  2. paulbraren says:

    Wow Robert, just wow!
    I just took this over to Google+, to see what others think…

  3. In this case of using more than one Virtual Machine instead of using Hyper -V I would just buy me a licensed copied of VMWare Workstation 9 (Or higher) and run as many VM’s that the hardware and OS will allow. Microsoft has really been trying to make up for lost revenue of late with the launch failure of Windows 8 and their tablet line.

  4. Mark Watson says:

    Great post.

    In the past we’ve sold the Essentials 2012+Server 2012+RDS CALS to get a Virtualised Remote Desktop Server solution, what I didn’t know was that you also needed server CALS as well for this solution, I thought the Essentials CALS would handle that.

    • Sadly not. With the old SBS Licensing, and CALs it was true that the SBS CAL would cover any Server on the network of equivalent os, or older. (CALs going down not up) With SBS Essentials 2011, when using the PAO you also did not need a Server CAL to access the PAO server. That was changed with the release of Essentials 2012. Although as i am writing i really cannot remember so would need to refer back to the post i did on that.

  5. Alex Heron says:

    Is this licensing the same if you use VMware ESXi as the hypervisor, or is it only applicable if using the essentials hyper-v?

    • Hi Alex, Which particular part?

      The requirements for CALs are irrespective of the HyperVisor used (so vmware or hyperv or anything else)

      The 1+1 licensing for essentials is only related to Hyper-V.

      If you can clarify your question hopefully i can get you an answer.

      • wrecknaro says:

        Thanks Rob, I think you answered my question anyway, but we are building a server for a client with ESXi 5.1. We are planning an R2 Essentials VM with 2 additional 2012 R2 Std VM’s, when they become available.

  6. mcbsys says:

    I’ve just installed 2012 Essentials R2 on new hardware from VL media. I’m looking for the prompt about whether to set up the 1+1 scenario (“Install as a virtual instance”). It’s not there. Turns out this is only possible if you build special OEM media:

    Oh and please build it using Windows 8.1 or an existing 2012 Essentials R2 install:

    That’s a lot of work. If as you say, the host can only run Essentials as a guest, it hardly seems worth it. Do you have a reference on that? The PUR say “3. If both permitted Instances are running, the Instance in the Physical OSE may be used only to run hardware virtualization software, provide hardware virtualization services, or run software to manage and service operation system environments [plural!] on the licensed server.”

    • what you are referring to is one method designed for OEMs to deploy Essentials with this wizardised VM install.

      There are other ways to do this.

      • mcbsys says:

        What other ways? Susan Bradley says, and Cliff Galiher confirms, that building your own media is the _only_ way to deploy Essentials as a Hyper-V host:

        Install Essentials from VL media on bare metal and you don’t get the Hyper-V option: it starts the Essentials setup wizard on every boot and won’t take no for an answer.

        More concerning is the bit about the host only running Essentials as a guest. I can’t find that in the VL PUR; in fact the only MS source I’ve seen on this so far is a blog comment by GPM Jason Anderson:

        Yes, as with SBS 2008 and later, it makes sense to virtualize if you are running other VMs, as long as you license the hypervisor separately. But it’s hard to see any benefit to virtualizing Essentials R2 using its own license. You will lose hours building media. You will never be able to use its Hyper-V for anything else. Want to add a Windows 7 or Linux guest for use as a PBX? No can do. So unless you are preparing to upload the Essentials VM to Azure (which may be what MS is hoping you will do), I don’t see the point.

      • Well, the other way to do it is to not use the OEM deployment option.

        After the initial install is done, and the Essentials Wizard starts, close the wizard.

        You can then go into Server Manager, and run the Remove Roles and Features Wizard. Select to Remove Essentials, and run the Essentials Clean up Task.

        Once that is complete, you can go through and remove the Essentials Experience Role, and the Web Server Role.

        You can then remove the ‘EssentialsRoleConfigWizard’ Key from the Registry under, HKLM>Software>Microsoft>Windows>CurrentVersion>Run

        If you like you can then also go through and remove the Features like ‘Ink and Handwriting’

        However at this point, you have a pretty clean Host machine and can Enable Hyper-V and just install your Guest VM as you would any other Host.

        I cant really comment on the PUR, or the EULA. I do know that Microsoft have repeatedly confirmed to us that ‘Essentials as a Host can only host a Single VM – an Essentials VM’ and granted this is possibly a limited scenario – however if you consider the DR features of Hyper-V on 2012/R2 wether that be replicating to Azure, or just to another Hyper-V host it is not as bad an idea as some suggest. If you do want to host other VMs on the system, install the Free Hyper-V server and fill your boots. Or purchase a second Server 2012 License as i suggested above, and assign both to the same hardware, then you get your Essentials Guest _and_ an additional 2 VMs.

  7. mcbsys says:

    Thanks, Robert. I figured there might be a way to “downgrade” to pure 2012 R2, but after reading Susan Bradley’s comment re. OEM deployment (“You have to install using that setup, it’s the only supported way.”), decided I had better not try. Strange that they wouldn’t just include the Hyper-V host option in the default non-OEM wizard.

    Meanwhile I have one virtualized install (under my Action Pack Standard 2012 R2 license) and one bare metal (at a client site). When I get some time I’d like to test DR by restoring the Windows Backup from the client site onto dissimilar hardware or even into a virtual machine.

  8. Andy says:

    Can I just confirm, is it possible to run essentials R2 as an instance under ESXI

  9. Slator says:

    I have been “wrestling” with the 2012 R2 Essentials as a VM {host + guest} for quite some time and have reached some conclusions – all of which, are the result of first hand experience. However, I do not want to convey that I am some sort of “guru” on the topic so, consider the following as merely providing some empirical information.

    Caveats (not sure how/IF the retail purchased versions would act differently):
    (1) 2012 R2 Essentials = 180 Day Evaluation Version (no Product Key required)
    (2) 2008 R2 Standard w/SP1 = MSDN version (Retail Product Key)

    Steps Successfully Completed:
    1) Installed 2012 R2 Essentials as if using as a single/physical server for Essentials NOTE: I allowed the install/configuration to complete – unlike what some have suggested to stop the Essentials Configuration part of the install.
    2) Using Server Manager, click-on {Manage} in the upper/right Menu Bar and select {Remove Roles and Features} and remove the Essentials Experience Role. NOTE: You will also be required to run {Essentials Cleanup…}.
    3) Created a (new/1st) Hyper-V guest and installed 2012 R2 Essentials (including any required configuration) for the 2nd time. REMEMBER: This was the Evaluation Version – so no Product Key or Activation was required.
    4) Created a (new/2nd) Hyper-V guest Installed 2008 R2 Standard.
    5) Activated the 2008 R2 guest VM = entered Product Key + “Activation was successful” + verified Authentic…
    6) Performed a few SIMPLE checks:
    …..Internet connectivity = OK
    …..Remote Desktop Connections = OK
    …..Windows Updates = OK

    My Conclusion (albeit somewhat superficial):
    (a) 2012 R2 Essentials (physical) can be changed manually (after the initial install) to perform Hyper-V functions. NOTE: I am not completely sure what the “Cleanup…” process does but, my guesstimate is that it removes any of the Roles & Features that are not needed for Hyper-V and/or would conflict with the Essentials guest VM install.
    (b) A 2nd Hyper-V guest VM (e.g., 2008 R2) can be installed and would appear to work as expected – provided there is a valid Retail Product Key.

    What Is Still Unknown (will test some time in the “not-to-distant” future):
    (a) Were the Essentials CALS/Devices affected? – there should be 25/50…
    (b) Was the Essentials Remote Anywhere Access affected? (e.g., without buying RDS CALS)

    Hope this helps someone else…

    • If you are using the Essentials SKU (not the Experience Role) then there are no ‘CALs’ the OS is simply sold ‘as is’ with a limit of no more than 25 User Accounts and 50 Devices. When you go beyond that it starts to get unhappy. When people say ‘it includes 25 CALs’ it is misleading and inaccurate.

      Anywhere Access only requires RDS CALs if you are using the Experience Role, or, if using the SKU, if you are using the RDP Gateway directly without first logging into the RWA. ie, if using a Mac and an iTap style App.

      Not sure if that answers your left over questions or not.

  10. Rubo Aris says:

    How about this scenario:
    2012 r2 Essentials + 2012 r2 Standard running 3 VMs.
    1st 2012 r2 Essentials / 2nd 2012 r2 Standard + SQL 2012 / 3rd 2012 r2 Standard + Exchange.
    I have 4 workstations in the office accessing the SQL & Exchange.
    SQL comes with 10 CALs & Exchange comes with 5 CALs.
    Do I still need to purchase 2012 r2 Standard CALs for each workstation accessing the SQL & Exchange?

  11. Cleston says:

    Very interesting strategy, indeed!

    I’m newbie at this, thus I would welcome a clarification: since you keep the Essentials’ license, a guest VM running Windows Server 2012 R2 Essentials – not the Experience role – wouldn´t need CALs in order to connect to other devices (up to 25 User Accounts and 50 Devices limit), right?

    I need 3 VMs and I’m thinking of using the Essentials one to connect to 25 devices max. The other two would connect to very few devices.
    That way I’d not only save money on a physical server but on unnecessary CALs as well, IMO.

    Thanks in advance,


  12. Warren-G says:

    Hyper-V Server on server core is just not going to get any traction, even if it is free. Microsoft really just needs to create a version of Windows Server that only includes the Hyper-V role. The only way this would be licensed would be as a Hyper-V host. It should be free (or low cost) and they would see their market share in virtualization explode. Right now it’s just too difficult to untangle the mess they are creating. How do we get MS to release something that has all the capabilities of the full GUI based Hyper-V server?

    • Dominic says:

      Can someone clarify, can the host installation of server with “only the hyper-v role” be a full desktop GUI? Potentially allowing local access to host OS and and in turn a remote desktop connection the guest VM?

      • Do you mean a normal OS Install (non core) with only Hyper-V enabled? Yes that will have a GUI.
        The only other option is the Free Hyper-V Server, which is a Core only install that you manage from a workstation with the Hyper-V Tools.

      • Dominic says:

        Thanks for the fast reply. I’m looking into options for a high performance workstation to be shared between three users. I like the option of having the server host OS being used by the main user and the other two users each accessing guest virtual machines (running windows 8.1). Hyper-V server doesn’t have the desktop UI to allow a local user. The two remote users would connect from existing windows 8 workstations. Would this arrangement require addition licensing if we made use of Remote Desktop, firstly from the host server into the VMs and secondly, from the remote workstations into the VMs?

      • That sounds like a bit of a minefield.

        Why not use a Windows 10 running Hyper-V, although I don’t know if the guests continue to run if the User is logged off – assume they would.

        Why not use an RDS Server or similar?

      • Dominic says:

        It seems that you need a server version of hyper-v in order to utilize the host gpu for guest vm workload. All three users will be doing interactive graphics intense activities, CAD for example.

        I have just read that essentials server will only allow a single VM to be hosted and it must be essentials server, see the first comment here:

        If this is still true, I am more likely to move to a free hyper-v server to avoid the cost of server 2012 standard. It would simply mean I have to use three remote workstations to allow the three concurrent users access to the three VMs.

        So, all in, I would need the new high performance server hardware running Hyper-V server, three desktop/workstation PCs, and 6 licenses of windows 8.1 (3 for the PCs and three for the VMs). I am still unsure though, do I need additional license to use remote desktop between windows 8 PCs?

        I will look into RDS server, thank you for the suggestion.

      • It does say above that the Essentials license on it’s own only allows for one VM (The Essentials Server) so in any event you will have to purchase a Server OS or use the Free Hyper V server.

  13. Tim says:

    Hey, I’m looking for the cheapest file server + RDS role setup for 5 users office (not likely to expand)

    Going on above, which would be cheaper & legitimate:?

    1. 1x Server 2012 R2 Essentials SKU (guest, running domain, file & print) + 1x Server 2012 std (as Server 2012 Std (HyperV host) + Server 2012 STD (RDS host guest)) … In this scenario for 5 users would I only require the 5 RDS CAL’s?


    2. 1x Server 2012 STD (HyperV Host) = (Server 2012 R2 guest as Essentials role) + (Server 2012 R2 guest as RDS role) … with 5x CAL’s & 5x RDS CAL’s …

    I’m thinking option 2 of buying all the CAL’s would be cheaper for the 5 users then purchasing essentials + server 2012 separately? What would I miss out on doing it this way? Thanks!

    • What about Foundation Server?

      • Tim says:

        I did not think you could virtualise foundation? i.e. how do I go about installing AD + RDS on the same server?

      • It is preinstalled, true. But I believe that RDS is supported on Foundation Server. You just need the RDS CALs.

        ie, Foundation can be a DC and an RDS Host.

        I need to confirm that, but I am 90% sure that is correct.

        Looks like I had got my wires crossed. Ok, so I think you are right in your earlier comment.

        The two options you have, you either buy an Essentials SKU and a Server 2012 License and CALs, or just a Server 2012 License and CALs. I think option 2.

      • Tim says:

        Thanks for checking my research :) – it sucks how it’s so expensive for a small outlay of 5 users these days but oh well that’s Microsoft

  14. Jon Ranes says:

    We have gone all Linux except for our webservers, we love c# and visual studio and mvc. Glad I read this; we use Zentyal for domain controllers and Xen for visualization on CentOS. I was thinking I might try our new copy of Essentials to run some Hyper-V but it sounds like I’ll just visualize it on Xen and avoid this whole “single vm” craziness. I didn’t buy a new server to have one VM on it seriously.

  15. ajhowardau says:

    Can I have a physical pc with server 2012 r2 complete with essentials installed and server 2012 r2 without essentials on hyper-v?

    • If I understand you correctly, you would still need some sort of virtualisation software to run two operating systems on the same server.

      • ajhowardau says:

        Thanks for getting back to me Robert .

        I mean install windows server 2012 r2 essentials with my current licence and install hyper-v role and essentials. Then create a virtual WSE within hyper-v without the hyper-v role or essentials add on.

        Is this legal?
        Do you i use the same product key for both?
        What if I created a virtual ubuntu within hyper-v…is that legal?

  16. I have an essentials server and used the same installation media to create a guest in hyper-v I removed active directory and joined the vm as a member server. Now I’m getting licensing errors

    How do I fix this? Do I have to buy standard for my guest instance?

    Log Name: Microsoft-Windows-ServerEssentials/Admin
    Source: Microsoft-Windows-Windows Server
    Date: 5/1/2016 10:14:54 PM
    Event ID: 1280
    Task Category: None
    Level: Error
    User: SYSTEM
    Critical Alert: NonDMCompliance is raised at SQLSERVER. License Error: Non-domain Member Check. The Non-domain Member Check policy detected a condition in your environment that is out of compliance with the licensing policy. This server can only be in a workgroup or be a domain controller.. .

    License Error: Non-domain Member Check
    The Non-domain Member Check policy detected a condition in your environment that is out of compliance with the licensing policy. This server can only be in a workgroup or be a domain controller.

  17. Is this approach also true of Server 2016 Essentials?

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