Windows 365 vs Azure Virtual Desktop vs RDS vs self-hosted: picking a virtual desktop stack

Say you have worked through whether a virtual desktop pays off at all and the answer is yes. Now the question is which stack. The options differ less in what the user sees than in who operates the infrastructure, how you pay for it, how much control you keep, and — the one that quietly decides most of it — Microsoft licensing. Here is how the realistic choices actually compare.

The realistic options

• •Windows 365 — a fixed-price managed Cloud PC per user.
• •Azure Virtual Desktop (AVD) — virtual desktops you build and run on Azure, priced by consumption.
• •Windows Server RDS — the conventional on-prem or hybrid option, session-based or per-VM.
• •Self-hosted — own the stack on Proxmox or similar, with RDS, Kasm, Inuvika or Guacamole as the building blocks.
• •Enterprise brokers — Omnissa Horizon or Citrix, for large and complex Windows app estates.

Windows 365: fixed price, least to run

Windows 365 gives each user a persistent Cloud PC that Microsoft hosts and operates. You do not design host pools, autoscaling or the underlying VMs — you assign a Cloud PC of a fixed size and pay a per-user monthly fee. It comes in two editions: Business, aimed at smaller organisations with a simpler model, and Enterprise, which integrates with Intune, Entra ID, networking and policy for managed deployments.

Pricing is the simplest of any option here: per user, per month, by configuration. A 2 vCPU / 8 GB / 128 GB Cloud PC lands on the order of US$30–45 per user per month depending on edition (Business or Enterprise) and commitment, rising with CPU, memory and storage. Treat that as a rough reference and check Microsoft's current pricing for your edition and market, not a headline number.

• •Good when: the deployment is small and predictable, desktops are persistent, you want a seat price rather than an Azure bill, and in-house Azure skills are limited.
• •Limits: the fixed seat cost adds up at scale, it is less flexible than AVD, and the Business edition is thin on enterprise controls — for deep Intune and networking integration you want Enterprise.

Azure Virtual Desktop: consumption, flexible, more to operate

AVD is an Azure infrastructure service. You build host pools, and Windows multi-session lets several users share a host, with autoscaling to match capacity to demand. The desktop access rights usually come with a licence you already hold — Microsoft 365 Business Premium, E3/E5, F3, or Windows Enterprise E3/E5 / VDA — so the user entitlement is often not a new line item. What you do pay for is the Azure side: session-host VMs, managed disks, profile storage (FSLogix on Azure Files or Azure NetApp Files), networking and egress, plus management tooling (Nerdio is a frequent add-on). There is no single per-user AVD price, by design.

• •Good when: you already run in Azure, concurrency is variable or low, you want multi-session density, and you need fine Azure control.
• •Cost: can undercut Windows 365 at scale or with low concurrency, but it is a design-and-operate job — a mis-sized host pool or missing autoscale burns money quietly.

Windows 365 versus AVD in one line: Windows 365 is a predictable seat price with the least to operate; AVD is a variable Azure bill that can be cheaper at scale but needs real engineering. The two also combine well — Windows 365 for persistent users, AVD multi-session for task workers. If you are weighing the wider cloud too, our AWS vs Azure for EU SMBs note covers the ground around it.

Windows Server RDS: the conventional on-prem or hybrid option

Remote Desktop Services is the long-standing Windows answer. RDSH puts many users into sessions on shared Windows Servers and is usually the most cost-efficient design; RDS-based VDI hands each user their own VM for stronger isolation at higher cost. Either runs on whatever hypervisor you already have — Hyper-V, Proxmox or vSphere — or in a cloud.

The licensing is the catch people miss: a Windows Server licence, a Windows Server CAL per user or device, and an RDS CAL per user or device. Both CALs are required, not either/or. A Windows Server RDS User CAL budgets at a few hundred US dollars per user through typical channels, and the exact figure swings with Software Assurance, agreement and region — price it from a current quote.

• •Good when: you already run Windows Server and have the hosts, you prefer capex to a monthly bill, the data should stay on-prem, and the line-of-business apps suit shared sessions.
• •Watch: both the Server CAL and the RDS CAL apply; session isolation is weaker than a VM per user; and you own patching, the connection broker and its uptime — RDS has no one else running it for you.

Self-hosted beyond RDS: Proxmox, Kasm, Inuvika, Guacamole

If the goal is to own the stack outright for cost, data sovereignty or freedom from vendor lock-in, these are the realistic building blocks. Each does part of the job, and the gaps matter as much as the strengths.

• •Proxmox VE hosts desktop VMs well and can present them over SPICE, but it has no native connection broker, image-lifecycle management or autoscaling. The realistic self-hosted path is to run Windows Server RDS on Proxmox VMs (RDS does the brokering), or to put one of the tools below on top. Proxmox is the platform underneath, not a VDI product by itself.
• •Kasm Workspaces streams browsers, Linux desktops and individual apps from containers, is self-hostable, and has a free Community Edition. It is excellent for isolated browsing, zero-trust and contractor access, and disposable ephemeral desktops — but a container workspace is not a full persistent Windows VM with enterprise profile and peripheral support.
• •Inuvika OVD Enterprise is a Linux-based delivery and brokering layer, positioned as a lighter alternative to Citrix. It can publish Windows applications — but those still execute on a Windows RDS backend, so Windows Server, RDS and user-access licensing do not go away.
• •Apache Guacamole is a clientless HTML5 gateway for RDP, VNC and SSH. It is a superb access layer for existing machines and jump hosts, but it is not a broker: no desktop provisioning, no image management, no profile or policy orchestration. It connects to the desktop estate; it does not create one.

Self-hosting VDI means you become the connection broker, the image pipeline and the help desk. At the right size — and with a team that can carry it — it is real control at real savings. At the wrong size it is a second full-time job wearing a cost-saving badge.

Enterprise brokers: Omnissa Horizon and Citrix

Two heavyweights remain worth naming. Omnissa Horizon is the former VMware End-User Computing business, acquired by KKR and run as the independent company Omnissa since 2024; it is subscription-licensed, and the underlying vSphere stays a separate Broadcom cost. Citrix is now part of Cloud Software Group, with Citrix DaaS as the cloud control plane and Citrix Virtual Apps and Desktops as the broader platform. Both are strong for large, complex Windows application estates, granular policy and hybrid delivery. For a small office that needs a handful of desktops, both are usually overkill and quote-based — choose them for scale and existing skills, not for a few seats.

Decision table

How we choose with clients

We start from the constraints, not the logo: where the data must live, how many people are on at once, which applications matter, whether there is already an Azure footprint, and what the team can realistically operate. From there the lowest-complexity fit usually falls out — Windows 365 or RDSH for most small offices, Azure Virtual Desktop when Azure is already in play and there is session density to exploit, self-hosted when sovereignty or cost justify owning the stack and the people exist to run it, and the enterprise brokers only at genuine scale. Whichever it is, we count the licensing up front and test the failure path before it carries real users. This is part of our server and virtualisation work and our infrastructure services; the hardening that should travel with any remote-desktop rollout is in our Entra ID and Microsoft 365 checklist.