Windows 365 — Microsoft’s cloud-based OS explained

Microsoft introduced Windows 365 three years ago, a service that lets the company cut partners out of the money-making loop by providing virtual PCs to customers.

Rather than provide only the operating system or the OS and bits of other software — notably productivity applications in the form of Office — Microsoft also serves up ersatz hardware, virtual machines running on its vast cloud of Azure servers.

Dubbed “desktop as a service” (DaaS, in keeping with other, similar acronyms) by some, Microsoft’s tagged its offering as “Cloud PC” as in “Windows 365 is your PC in the cloud.”

“Just like applications were brought to the cloud with SaaS, we are now bringing the operating system to the cloud, providing organizations with greater flexibility and a secure way to empower their workforce to be more productive and connected, regardless of location,” Microsoft CEO Satya Nadella said in a statement at launch.

Windows 365 hasn’t exactly done away with the need for high-powered laptops altogether — Microsoft and its OEM partners have recently focused their attentions on selling “AI PCs” — but the concept has shown some appeal with enterprise firms, and Microsoft cites FedEx, ING, and Carlsberg as customers. Together with Azure Virtual Desktop, Windows 365 contributed more than $1 billion in revenues last year, Nadella revealed in Microsoft’s 2023 annual investor report, with a third of Microsoft’s enterprise customers paying for “cloud-delivered Windows” as of mid-2023. 

What is Windows 365?

At its simplest, it’s a virtualization service that provides a Windows desktop and first- and third-party applications to users with both PC and non-PC hardware.

Maybe it’s better to think of it as a streaming service. Rather than stream movies and TV shows, it streams the output of a Windows 10- or Windows 11-powered PC. The controller is the keyboard, touchscreen, mouse, even the microphone of whatever device is in front of the user.

It’s also the latest incarnation of the thin computing model, which harks to the beginnings of digital computing when the computer was massive and cost multi-millions — and endpoints were unintelligent terminals. Like that model, Windows 365 runs the virtual desktop on servers at a distance; the data is transferred over the Internet rather than an organization’s network.

How much does Windows 365 cost?

Microsoft charges a flat monthly rate per user, rather than basing the cost on the amount of activity, as in the amount of Azure resources consumed. 

There are 13 virtual machine configurations available. The most basic (two cores, 4GB of memory and 64GB of storage) costs $28 per user per month; the most advanced (16 cores, 64GB RAM and 1TB of storage space) is $315 per user per month — that amounts to a hefty $3,780 each year. That’s for Windows 365 Enterprise;Windows 365 Business customers pay an additional $4 per user a month for each SKU, in comparison. There is, however, a discount when Windows 365 is accessed via a device that runs Windows 11 Pro or Windows 10 Pro,  however; it lowers the cost by $4 a user each month.

As of August 2024, access to Windows 365 machines with GPUs is now available. There are three configuration options, from Standard, for basic graphics workloads, to Max, for the most demanding uses. GPU pricing hasn’t been made public yet, however. 

So we continue to pay for, say, Microsoft 365 E3 licenses and for Windows 365? Isn’t that double billing?

No, though it’s easy to see it that way.

The Microsoft 365 license gives you the right to use the included software, among that collection Windows 10 (and down the road, Windows 11). The Windows 365 license pays for the virtual PC Microsoft’s built, and Microsoft maintains on its servers that run the operating system you paid for.

It’s no different than if you were on a physical PC. You paid for that with one invoice. You paid for the Microsoft 365 license with another.

What are the different versions of Windows 365?

There are two main Windows 365 products. Windows 365 Business, which caters to smaller organizations with up to 300 employees, is more straightforward to get up and running. Then there’s Windows 365 Enterprise, which has no limit on users. The enterprise version provides more control over the management of virtual PCs via Microsoft’s Intune, as well as integration with Microsoft apps such as Entra ID (formerly Active Directory) and Defender for Endpoint. 

There are also two variations of Windows 365 Enterprise. Aimed at organizations with shift and part-time workers, Windows 365 Frontline edition lets up to three employees share a single Windows 365 license, provided they access the virtual PC at different times. Windows 365 Government is designed for US government agencies and contractors that have access to Government Community Cloud (GCC) or GCC High, with stricter security and compliance standards than Windows 365 Enterprise.

What are the requirements for running Windows 365?

This is simple for Windows 365 Business, as all necessary licenses are included in purchases. 

Access to Windows 365 Enterprise and Frontline requires licenses for Windows 11 Enterprise or Windows 10 Enterprise, Intune, and Entra ID P1. 

What powers Windows 365?

Not surprising, Microsoft’s own cloud computing platform, Azure. Specifically, Azure Virtual Desktop, which can be used to create Windows virtual machines on Redmond’s servers, then stream those desktops to PC and non-PC devices.

Windows 365, Microsoft repeatedly said, is essentially an automated Azure Virtual Desktop, in that the former handled all the scut work of creating and assigning the virtual machines, slapped an analytics package on the result and offered a one-stop dashboard for admins.

Elsewhere, Microsoft characterized Windows 365 as a way for admins unfamiliar with virtualization (or hesitant to learn) to call on Azure Virtual Desktop.

On what devices can we run these virtual desktops?

At a basic level, the only requirement is access to an HTML 5 browser, says Microsoft, so most modern devices with online access will do the job, whether they run Windows 11 or 10, macOS, Linux, iOS, or Android.

Those that want to log in to a Windows 365 PC via the Microsoft Remote Desktop app for Windows will need to meet modest hardware requirements such as 1GB RAM (see a full list here), while access to Microsoft Teams requires a device with at least 4GB RAM.

What kind of internet connection do we need for Windows 365?

This will mostly depend on the demands of a particular app or workload. But, roughly speaking, if you’re able to stream video, you should be good to go. 

Microsoft recommends a minimum bandwidth of 1.5Mbps for light workloads, and up to 15Mbps for more demanding scenarios such as video conferencing or 4K video streaming.

Monitor display resolution plays a role, too — a screen resolution of 3840 x 2160 pixels would require a faster 15Mbps connection, for example.

What’s new in Windows 365?

As you’d expect, Microsoft has added numerous features to Windows 365 since its launch in 2021, with several aimed at improving the user experience. Windows 365 Boot option — available since September 2023 — is one such addition, enabling users to connect directly to their Windows 365 PC from the login screen of their device.  

More recently, Microsoft has begun to offer GPUs as an option for workers that require high levels of parallel processing power, such as 3D modelling and video rendering. Microsoft also recently announced the availability of “AI recommendations” that provide admins with suggestions around Windows 365 configurations based on analysis of employee usage data.