W365 and Azure Virtual Desktop – what’s the difference?

W365 and Azure Virtual Desktop – what’s the difference?

Microsoft offers two virtual desktop solutions – Azure Virtual Desktop (AVD) and a newer sister offering, Windows 365 (W365). Both are excellent solutions and deciding which one to use depends on your current IT environment and requirements. If you’re an IT decision maker, this blog will help you understand both solutions to decide which one is right for your organisation.

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    W365 and Azure Virtual DesktopWhat are W365 and Azure Virtual Desktop?

    In a nutshell, Windows 365 (W365) is built on AVD under the hood but provides simpler management and set-up than AVD. However, AVD gives you the most flexibility and the fullest capability. There are several factors to consider when deciding which is the most suitable solution for your business. Read on to find out more.

    How do you pay for W365 and AVD?

    There are other cost elements that we’ll cover later, however here’s the main difference between how you pay for W365 and AVD:

    • W365 – is a fixed, per-user, per-month cost for the W365 licenses bought in the M365 portal.
    • AVD – is a monthly cost based on your Azure consumption including the size of VMs and how long they’re on for. This is billed as part of your Azure subscription.

    Paying for W365

    Just like existing O365 or M365 licenses, as highlighted above, W365 is licensed on a per user per month basis through your Microsoft 365 portal. This is a fixed cost per month for the chosen license.

    A suitable size of W365 Cloud PC – in terms of CPU, memory and disk – is required for each of your users. You then buy the appropriate W365 Business or Enterprise license (see below for the differences between the two versions) and assign them to your users. This gives each user their own Windows 10 Cloud PC which is permanently on – it can’t be shut down to economise.

    Paying for AVD

    With AVD, you pay for what you use. Azure Virtual Machines (VMs) are deployed as session hosts for virtual desktop sessions and you pay for the Virtual Machines (VMs) through an Azure subscription. The monthly cost of the VMs is based on their size (CPU and memory), and you are billed for running time regardless of whether anyone is using them. Therefore, if your users only need their Virtual Desktops during business hours, then you can shut them down out of hours to reduce the monthly cost of your VMs.

    Is W365 or Azure Virtual Desktop more costly?

    This section aims to compare the cost of W365 and AVD with an example, rather than to calculate the cost for your specific requirements. Whether you’re looking at W365 or AVD, the cost of the solution will be driven by the same factors:

    • The number of users that need a virtual desktop.
    • The compute power that each virtual desktop needs (CPU and memory) to run applications such as the Office suite, your browser and any line of business (LOB) applications.
    • Licensing for Windows 10, Office (if used on the virtual desktop) and management capabilities such as Intune and Azure AD P1, if needed.

    In summary, the deciding factor primarily concerns the cost of compute power and whether there are any significant cost differences between buying the same power in W365 or AVD.

    Let’s take a typical example scenario to illustrate this and other cost elements:

    • you have an on-premise network with a Domain Controller
    • users are licensed for M365 Business Premium (for email and Office etc)
    • 48 users that require a virtual desktop
    • Virtual desktops require licensing for Windows10 and Office
    • Each virtual desktop requires 2 CPU and 8 GB RAM
    • Central management of the virtual desktops is handled by the in-house IT team
    • Availability of virtual desktops for users:
    • 40 to be available during business hours
    • 8 to be available 24 x 7


    W365 Business cost illustration

    So if you are going to meet the virtual desktop requirement above using W365, what will the cost be?


    For W365 Business two options are available – standard or discounted for those with Windows Hybrid Benefit. The discounted option is available to businesses using devices with valid Windows 10 (W10) Pro licenses. Each user of a W10 Pro-licensed device must have it as their primary work device. For this example, we’ll assume that you don’t have valid W10 Pro licenses and can’t use the Windows Hybrid Benefit.


    • For W365 Business (2 vCPU, 8 GB RAM, 128 GB storage) the additional cost of the virtual desktops for 48 users x £38.30 per month 
    • Total: £1,838 per month
    • To manage the virtual desktops centrally (see below), you need Intune and Azure AD P1. These are both included in M365 Business Premium (which we’ve assumed you already have).
    • You’ll also need to license Office on the virtual desktops – this is also included in M365 Business Premium.

    Note: The cost of the equivalent W365 Enterprise license is the same, however there are additional set-up requirements.

    AVD cost illustration – example A

    Now if instead of using W365 for the virtual desktop solution, you use Azure Virtual Desktop (AVD) what will the cost be?

    • You have 6 session hosts
    • 8 users per session host = 48 in total
    • Each user needs 2 vCPU and 8GB of RAM
    • So each session host VM needs 16 vCPU and 64 GB RAM

    Note: Each user needs to be licensed for W10, Office with shared computer activation and FSLogix – these are all included in M365 Business Premium which we’ve assumed you already have.


    • D16s v4 virtual machine has 16 vCPU and 64 GB RAM: 

    Cost £483 per month (without W10 licensing as this is covered by M365 Business Premium). See Linux Virtual Machines pricing

    • One of these will be on 24 x7 to meet the requirement for virtual desktop sessions for 8 users at a cost of £483 per month.
    • The other 5 session hosts only need to be on during business hours (35% of all the hours in a month) at a cost of 5 x £483 x 0.35 = £845.25 
    • Total: £1,328.25 per month

    Other monthly Azure costs:

    • £100 for a VPN Gateway for a Site-to-Site VPN connection between the Azure Vnet that the session hosts are in and your on-premise network so that the session hosts can see the Domain Controller.
    • £40 for Azure Files for storing FSLogix user profiles
    • £60 for OS disks for the Session Host VMs
    • Total: £1,528 per month approximately

    AVD cost – example B

    • If we change the requirement so that all 48 virtual desktop sessions need to be available 24×7, then the AVD solution becomes much more expensive. 
    • However, if we apply 1 Year Reserved Instance pricing to the 6 session host VMs, there is a 41% discount for the chosen VM type. 
    • This makes the total cost of the AVD solution marginally more expensive than W365.
    • Total: £1,910 per month.

    So the costs of the W365 and AVD solutions are very similar, and your choice should be mostly based on your requirements and your current environment rather than cost.

    Which one is right for you?

    There are three options depending on your requirements and your current environment:

    • W365 Business
    • W365 Enterprise
    • AVD

    W365 Business

    If you don’t have an on-premise infrastructure or applications (e.g. file server, finance system, Domain Controller) that you need your virtual desktops to connect to, then W365 Business is a great solution. It’s quick and straightforward to set up (see next section). 

    By default, users have local admin rights and can install whatever software they want on their W365 Cloud PC. If you want to remove their local admin rights, and manage these cloud PCs and their software centrally, you can do this with Intune

    Note: W365 Business is limited to 300 users, and there aren’t currently any W365 licenses that include dedicated graphics processors, although this is on Microsoft’s roadmap.

    W365 Business creates the virtual desktops in the same Azure region that your M365 tenant is in. They are created into a Microsoft managed network which is not visible to you, so the virtual desktops are not connected to each other in any way and can just access the Internet.


    AVD can be used for all requirements and is the most flexible and capable solution. Examples of things that AVD can do that W365 Business and Enterprise can’t are:

    • Give you a choice of dedicated (1 user per VM) or shared session hosts (multiple users per VM).
    • Publish remote apps as well as remote desktop.
    • Use any of the Azure VM families for session hosts, so that you can choose exactly what you need, including ones with dedicated GPUs for CAD applications for example.
    • Deploy your session hosts in any of the Azure regions around the globe.
    • Switch session hosts on and off.

    AVD requires you to have Active Directory for the session hosts to be domain-joined to – whether this is an on-premise Domain Controller, an Azure VM configured as a Domain controller or Azure Active Directory Domain Services. Read our blog explaining the difference between AD and Azure AD. You deploy the session hosts into an Azure Vnet, giving the virtual desktops connectivity to your on-premise resources and any that are in your Azure Vnet, as well as the Internet. The fine-grained control of what the virtual desktop users can and can’t do is done via Group Policy.

    W365 Enterprise

    W365 Enterprise requires you to have Active Directory with Hybrid Azure AD join-enabled. This can be an on-premise Domain Controller or an Azure VM configured as a Domain controller, but NOT Azure Active Directory Domain Services. It also requires you to have Intune to manage the Cloud PCs. If you’re already using Intune to manage your other devices, then this may make W365 Enterprise an attractive option.

    There is a useful table in this blog from the Microsoft Tech Community that shows the differences in capability between W365 Business and Enterprise.

    With W365 Enterprise you choose which of your Azure Vnets the virtual desktops are deployed into. They can then access your on-prem resources and any resources in your Azure Vnet, as well as the Internet. The fine-grained control of what the virtual desktop users can and can’t do is done with Intune.

    Note: Currently you can only choose one of these 13 Azure regions to deploy your W365 Enterprise cloud PCs into. If your existing Azure Vnet is in a different region you can use Global Vnet peering to connect the Vnets.

    How do you deploy W365 and Azure Virtual Desktop?

    Windows 365 Business

    This simply comprises buying a license and assigning it to the user. See this great blog from the Microsoft Tech Community for step-by-step instructions: Get started with Windows 365 Business.

    If you want to manage your W365 Cloud PCs centrally with Intune, see the steps in this blog: 

    Securing your Windows 365 Cloud PCs as well as our article: Microsoft Intune – managing and securing your devices in the cloud. These W365 Cloud PCs will be Azure AD joined.

    Windows 365 Enterprise

    This blog gives step by step instructions from the Microsoft Tech Community: Get started with Windows 365 Enterprise. These W365 Cloud PCs will be Hybrid Azure AD joined.


    We have produced a series of blogs on AVD, the second of which covers how to set it up. These virtual desktops will be AD domain joined:


    Microsoft offers two slightly different virtual desktop solutions – Windows 365 with Business and Enterprise versions and Azure Virtual Desktop. W365 is billed on a fixed cost per user per month license in the M365 portal whereas AVD is billed on a consumption basis through an Azure subscription. 

    On a like-for-like basis the solutions cost a similar amount, however they differ in their capabilities and the way in which they are deployed and managed. Choosing the best solution for your organisation is determined by the needs of your business and your current infrastructure.

    Let's discuss the best options for your business


    Our team includes Certified Azure consultants. If you’re interested in W365 and Azure Virtual Desktop, contact us for a free discussion to understand the best solution for your business. The only IT knowledge you’ll need to implement and manage this environment are traditional desktop management skills.

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