Comparing Windows 365 vs. Azure Virtual Desktop

Understanding Windows 365

Windows 365's virtual desktops function as cloud PCs, single-user desktop applications that use Azure for virtual desktop deployment and storage. Microsoft charges a fixed monthly licensing cost per user -- similar to leasing a physical PC -- so customers pay whether it is in use for 50 or 500 hours. Additional products and services, such as Azure paid subscriptions and Intune, might be required depending on the Windows 365 offering purchased. This will be described later in this article.

Windows 365 does not support Azure Active Directory Domain Services (AAD DS) or Windows 10/11 Enterprise multi-session. Multi-session workloads are only available in Azure Virtual Desktop, which can be licensed through Microsoft 365 plans.

Windows 365 offers two primary editions: Business and Enterprise. Each provides cloud PCs with predefined hardware configurations, including CPU, memory and storage. These configurations are offered as a range of fixed-size options rather than custom options.

Windows 365 Enterprise edition

The Enterprise edition offers unlimited seats per user and is more flexible than the Business edition, giving IT staff greater freedom to configure the network. Enterprise edition is ideal if high levels of security are required, or if the organization needs network integration, policy control or scalability.

Important features of the Windows 365 Enterprise edition are centered around flexibility and scale for enterprise-level organizations.

• Effective for organizations of any size, as there is no seat cap per tenant, thus an unlimited user configuration is possible.
• User actions are the same as the Business version, but role permissions are managed using Microsoft Intune.
• Requires Microsoft Entra ID P1 (previously Azure AD P1), Intune and Enterprise Windows licensing. An Azure subscription is optional. This offers the following advanced features:
• Windows 365 resources cannot be added to an existing Azure subscription or resource groups. However, they can be added with Azure Virtual Desktop.
• Policy Deployment, advanced monitoring and troubleshooting.
• Resizing, image management and policy targeting.
• IT staff can manage networking.
• Customizable provisioning, such as custom images and network configuration.
• Supports Entra ID Join and Hybrid Entra ID Join for identity integration. When used with an Azure Network Connection (ANC), Hybrid Join provides connectivity to on-premises networks and custom domains.
• Security features include conditional access, legacy multifactor authentication and integration with Microsoft Defender for Endpoint, which requires E5 licensing.

Pricing and licensing for Windows 365 Enterprise

Windows 365 Enterprise requires users to have enterprise-grade licenses, including Windows 10 and 11 Enterprise, Intune (per user), and Entra ID P1. Cost is based on configuration -- including vCPU, memory and storage -- and runs from $28 per user, per month to $41 per user, per month. Large configurations run $315 per user, per month for 16 vCPU, 64 GB RAM and 1 TB storage.

Fees are charged per named user, meaning everyone will need an account, and customers pay the fee whether the cloud PC is in use or not. In comparison, AVD is a pay-as-you-go service and only charges customers for the time and resources they use.

An Azure paid subscription is not required for the cloud PCs if you are using a Microsoft-hosted network, which requires Entra ID P1 and Intune. If an ANC is used, an Azure subscription is required to deploy the cloud PCs into an Azure Virtual Network (VNet). Organizations must choose either a Microsoft-hosted network or an ANC.

Windows 365 Business edition

Windows 365 Business edition is ideal for organizations that need simple, fast-to-deploy cloud PC options and for SMBs that do not require hands-on management, enabling Microsoft to manage it. The Business edition is limited to 300 seats but offers only basic security features, which require additional licensing for higher levels of security.

The Business edition offers the following key features that benefit SMBs or those with small deployments.

• Ideal for small organizations up to 300 seats per tenant.
• Simple, automatic provisioning. Cloud PCs use standard images based on license agreement.
• Administration and management are accomplished through the Windows 365 portal or the Microsoft 365 Admin Center. More advanced management is possible with an Intune license, but it remains limited compared to the Enterprise edition.
• Entra ID Join is supported without requiring VNet.
• Provides conditional access security only and requires Entra ID P1. Advanced features are not supported but can be added via the E5 License.
• Cloud PC users can manage and troubleshoot their devices from the Windows 365 homepage. Admins can grant local admin access to users individually.

Pricing and licensing for Windows 365 Business edition

The Business edition pricing depends on cloud PC configuration and is charged per user, per month, typically as an annual subscription.

• Basic: $31
• Standard: $41
• Premium: $66-$162

Understanding Azure Virtual Desktop

AVD differs from Windows 365 in many ways. Windows 365 is a fully managed, fixed-cost cloud PC with consistent pricing and simplified management and deployment, but at a higher cost per user than AVD. AVD still provides a virtual desktop benefit to users but enables organizations to manage and deploy those desktops in a more granular, efficient manner using Azure Cloud services. This flexibility comes with a greater need for administration and a heavier workload for IT professionals.

Unlike Windows 365, AVD supports multi-session Windows 10 and 11 configurations and integrates with AAD DS, which enables virtual desktops to join a managed domain without requiring a traditional on-premises AD infrastructure. This permits organizations to deploy AVD without a full AD DS environment. AAD DS provides AD services such as domain join, group policies and authentication as a managed service.

Organizations can deliver Azure Virtual Desktop as a personal or pooled desktop.

AVD personal desktops

Azure's personal host pool functions similarly to Windows 365 Cloud PCs. However, Windows 365 Cloud PCs are single-user -- one cloud PC per user -- and feature a fixed per-user monthly subscription. Azure's personal host pool assigns each user to a single dedicated session host VM. This configuration gives the user the look and feel of a traditional physical PC, but in the cloud. Because compute resources in personal host pools are not shared, they are often more costly than pooled desktops. This model is typically appropriate for power users who require higher performance.

With the personal desktop approach, IT can do the following:

• Provide a dedicated Windows 10/11 Enterprise virtual desktop to each user, which is accessible from any device.
• Deliver full desktops, with RemoteApp streaming available on pooled hosts.
• Support session hosts running Windows 10, Windows 11, Windows 7 and Windows Server OSes in a unified manner.

AVD pooled host desktops

A pooled host pool is a collection of session hosts (VMs) or shared desktops that deliver shared desktops or RemoteApp sessions to multiple users and are load-balanced across hosts. Thus, many users share VMs simultaneously. This is accomplished using the Windows 10 and 11 Enterprise multi-session feature.

The user experience in the pooled host configuration is preserved from session to session. Files, settings and apps are preserved between logins regardless of which VM they connect to. This is ideal for users who do not require a dedicated PC and use standard software, such as call center employees, customer service agents or general office workers.

This approach is also ideal for resource-intensive workloads. For instance, if a particular project has compute-intensive requirements, such as 3D design, IT can create a pool of nodes that meet those requirements and assign them to users. IT can create these nodes manually or in batch and organize them in any way it needs. There is no limit to the number of pools. IT can easily scale published pool desktops, enabling the admin to add or reduce capacity.

IT can create AVD pools with a custom image or an Azure Compute Gallery image and configure them with customized CPU, GPU, memory and storage to meet specific needs. AVD pools also support Remote App streaming, which publishes single apps rather than a full desktop. This turns AVD into a PaaS for delivering apps to users over a secure network, providing a SaaS-like experience.

Another significant feature of AVD is that it supports management through the Azure portal, Azure Virtual Desktop PowerShell and REST APIs. This enables IT to centrally manage virtual desktops, OSes and apps across the environment.

Perhaps the biggest drawback for AVD is the complexity that comes with this flexibility -- a bit of a double-edged sword. There are, however, plenty of third-party platforms, including Citrix, Nerdio and Workspot.

AVD pricing and licensing

AVD offers pay-as-you-go pricing, letting customers pay for compute capacity by the second. If a user runs a virtual desktop for nine hours a day for five days, they will pay for 45 hours. If there is a three-day holiday and the AVD is not in use, there is no charge, unlike the per-user model in Windows 365, which is charged regardless of usage.

In addition, Microsoft offers reserved instances for AVD session hosts that can be purchased upfront for up to three years. This can work well for customers with steady, predictable use patterns and offers additional cost savings over standard pay-as-you-go pricing.

Azure Virtual Desktop requires the following licenses and components:

• Windows Enterprise or Microsoft 365 licensing with AVD rights.
• An Entra ID tenant for identity and access management.
• An active Azure subscription to provision and manage session host VMs.
• Session host VMs that are domain-joined to AAD DS or a hybrid environment.
• User identities in Entra ID, either native or synced.

Is Windows 365 or Azure Virtual Desktop the best option?

At this point, organizations should determine which of these technologies best suits their business and infrastructure goals.

Consider that one of these Microsoft services might be especially attractive for organizations that have the following:

• A significant existing Microsoft investment, including Intune, Azure, Entra ID and related services.
• Frequent desktop deployment and features such as remote app streaming and cloud-based management.
• A large remote or mobile user base with challenges maintaining patches and security.

Pricing comparison: Windows 365 vs. Azure Virtual Desktop

For most organizations, the decision comes down to pricing. The Windows 365 pricing model is straightforward and reliable, intended for stable organizations without internal management expertise. Pricing is based on machine configuration and billed per user, per month. AVD pricing is a simplistic, usage-based model. Billing is per second or minute for the resources used by the virtual desktops.

How to decide between Windows 365 and Azure Virtual Desktop

The choice between these two products comes down to comparing their key features and pricing models.

Choose Windows 365 if the organization requires a simple, fully managed cloud PC environment with stable, reliable monthly pricing and lower IT overhead. Windows 365 is well-suited for SMBs or teams that already have Microsoft 365 services and need to provide individual virtual desktops to remote or hybrid employees without reduced management overhead.

Choose AVD if the organization has a complex user environment with variable computing needs and a flexible workforce that might require access to virtual desktops at various locations. AVD is a good option for organizations with an existing Azure infrastructure and services. It also benefits organizations that desire a granular pricing schedule that charges per second of actual computing resources used. AVD will also benefit organizations that need to deliver desktops and applications to large, complex user bases.

Choose neither if the organization:

• Has no investment or existing infrastructure based on Azure. However, if there are reasons for the organization to add an Azure infrastructure, these services could be a good fit.
• Has fewer than 50 users, though this is not a universal rule. Windows 365 Business is a good fit for smaller teams and SMBs, thanks to its simplified management.
• Has no administrators with Azure or virtual desktop expertise.
• Does not have a dynamic, relatively stable environment.
• Has relatively simple security and management considerations.

Determining the best virtual desktop product and service requires an organization to evaluate its needs based on size, scale, pricing, IT staff expertise and availability.

Editor's note: This article was updated in March 2026 to improve the reader experience.

Gary Olsen has worked in the IT industry since 1983 and holds a Master of Science in computer-aided manufacturing from Brigham Young University. He was on Microsoft's Windows 2000 beta support team for Active Directory from 1998 to 2000 and has written two books on Active Directory and numerous technical articles for magazines and websites.