Arrow Intelligent Solutions blog

I generally start my day with a steady flow of Microsoft IoT licensing questions. The basic ones roll in asking things like "Do I qualify for IoT?" and "How is Windows 11 IoT licensed?" Eventually, a Windows Server licensing question hits my desk, and that's when I dread the discussion about Client Access Licenses.

The easy part of server licensing is licensing the Windows Server operating system itself. You license all the processor cores with a minimum of 16 cores. However, the challenging part comes when I have to ask OEM customers: "How many clients do you need?"

The customer inevitably responds with something like: "Clients? I'm not sure. Can you explain what requires a Client Access License?"

Microsoft's New “CAL-Less” Solution

For years, I've explained what a Windows Server Client Access License (CAL) is and how it's licensed. However, Microsoft now offers something that eliminates the need for these complex explanations. They now provide a Windows Server IoT "CAL-Less" license.

This new CAL-Less server license option removes the licensing terms for Client Access Licenses, meaning the server doesn't require Windows Server CALs. All those questions about users versus devices and what needs a CAL have fallen by the wayside. Not only does this make my life easier, but it also dramatically simplifies the OEM customers' experience, keeping them completely compliant with unlimited users and devices.

The Benefits Are Clear

The CAL-Less option simplifies the lives of OEM customers by reducing the number of part numbers to just the Windows Server IoT OS licenses. No more questions like:

• How many users or devices will connect to your server?
• Does the end-user already own Windows Server CALs?
• How many CALs should I bundle with our solution?
• What requires a CAL?
• What's the definition of a User versus a Device?

What's the Trade-off?

For Microsoft to offer this excellent licensing option with no CALs required, they increased the price of the base Windows Server IoT license. You'll pay roughly the same price as a server bundled with 8 CALs, but you get unlimited users. For many OEM customers, this is a dream come true. They're happy to pay the additional fee to gain the advantages of guaranteed compliance and simplified solutions.

How Does the Server Know It's CAL-Less?

Traditional Windows Server CALs are licensed by purchasing User or Device CALs and delivered via a COA card (a piece of paper with a COA license attached). There's no product key to enter or software activation required. It operates on what we call a 100% honor system. The OEM passes the COA card with CAL licenses to the end customer, who must maintain the COA card license in case of an audit.

The CAL-less server includes product licensing terms that remove the CAL requirement entirely. CAL licenses do not require a COA card. The Windows IoT Server COA license will state "CAL-Less" on the COA license, indicating that no CALs are required. See an example here:

How to Order CAL-Less Server Licenses

To order the CAL-less license for Windows IoT Server 2019, 2022, or 2025, use the CAL-less license options below for your total number of physical cores. For additional cores, use the regular 4-Core add-on to reach your total processor core count.

Windows Server IoT Standard 2025 CAL-Less Options

Windows Server IoT Standard 2022 CAL-Less Option

Windows Server IoT Standard 2019 CAL-Less Options

Important Note About Remote Desktop CALs

This CAL-less server option does NOT include RDS Client Access Licenses. If your solution requires Remote Desktop Services CALs, you must still purchase them separately, as the CAL-less option doesn't cover RDS CALs.

In Summary

Simplify your solution by reducing the number of required part numbers, and keep your solution 100% compliant by allowing unlimited users and devices. For many OEMs, this is a fantastic offering that's only available in the OEM IoT channel. Use it to your advantage with your solution today!

If you need assistance or have questions about Microsoft Windows IoT, please get in touch with our team at: windowsIoT@arrow.com. We'll get back to you within 24 hours.

My biggest competitor to Windows IoT isn’t Linux or Android. It’s Windows Pro.

That might sound surprising—but in many cases, customers choose Windows Pro for their fixed-purpose devices simply because of misinformation. Sometimes, they've read something inaccurate online about Windows IoT. Other times, they just couldn’t find enough information at all. And so, they default to what they know: Windows Pro.
That’s precisely why I’m writing this blog. It’s time to clear up the confusion.

Windows IoT is purpose-built for you if you're building a fixed-purpose device or appliance. It offers the control, flexibility, and long-term support Pro simply can’t. With Windows 10 Pro reaching the end of support in October 2025, now is the right time to make the move to Windows IoT and keep running Windows 10 securely and reliably for years.

At Arrow, we’ve seen a sharp uptick in questions about Windows 10 lately. That spike is likely due to the upcoming end-of-support deadline. And what we’re finding is that for many customers, this is the first time they've even heard of Windows 10 IoT.

Let me touch on a few things I often hear from customers when it comes to Windows IoT:

• “I was told that IoT indicates that the device must be connected to the internet.”
• “Windows IoT can only be used for industrial controllers that run a single application.”
• “IoT stands for connected devices, and I can only use it if my devices are all connected.”
• “IoT doesn’t get any updates and thus many newer software applications won’t work with it.”
• “My software application is only certified on Windows 10 Pro, so I can’t use IoT.”
• “I already paid for Win Pro when I purchased the device, and I don’t want to buy Windows again.”

In addition to those common misconceptions, there’s much confusion around Windows 10 End of Support and its meaning.

Here are a few real questions and comments we’ve received from customers:

• “Once Support ends, will the computer stop working?”
• “When Support ends, can’t I just maintain security by keeping a 3rd party antivirus tool updated?”
• “For the Win 10 IoT LTSC product w/10 years support, do I have to pay for the extended support?”
• “What is ESU and how can I get it for my Windows 10 devices?”
• “How difficult is it to switch from Windows Pro to Windows IoT Enterprise LTSC?”

Let’s examine the most common misconceptions and explain why Windows IoT Enterprise is the right choice for fixed-purpose devices.

What Windows IoT Is—and Isn’t

First, let’s define Windows IoT. It’s a family of operating systems specifically intended for OEMs that manufacture and build fixed-purpose appliances. You might think “IoT” means everything has to be connected to the Internet—but that’s not true. Windows IoT is the evolution of Windows Embedded, which has been serving this market for over 30 years. It’s designed for use across any industry vertical—not just industrial controllers. You can run a single application or multiple applications on a device, whether or not it connects to the Internet. Many OEMs build completely offline devices using Windows IoT. The client IoT editions even support deferred activation, allowing systems to run without ever connecting to the Internet.

What About the Windows 10 IoT LTSC Edition?

Windows 10 IoT Enterprise LTSC Edition is a long-term support version of Windows designed for fixed-purpose devices. It offers enterprise features, enhanced control, and 10 years of security updates without disruptive feature changes.

Here’s where things often get confusing:

• Windows IoT Enterprise LTSC editions only receive Quality Updates—mainly security patches or critical hotfixes.
• They do not receive Feature Updates, which can sometimes disrupt system stability or application compatibility.

Your appliance can remain secure without changing the environment you certified and tested. That’s a huge win for long-term reliability.

Also, most applications that run on Windows 10 Pro will run just fine on Windows 10 IoT Enterprise LTSC, since it’s built on Windows 10 Enterprise—an upgrade from Pro. You’ll also get added control and manageability features exclusive to Enterprise editions.

Windows 10 IoT Enterprise LTSC 2021 is the final Windows 10 release and will be supported through January 2032.

Windows 10 Lifecycle Overview

What about Cost?

Customers often ask about cost, especially if they feel they’ve already paid for Windows 10 Pro bundled with a device. Here’s the reality: when you buy from OEMs like Dell, Lenovo, or HP, the Pro license is a part of the bundle—and the OEM likely paid very little for it.

That minimal cost shouldn’t prevent you from gaining all the benefits of IoT LTSC. IoT licensing is priced based on processor class, and the investment is well worth the long-term support, enhanced reliability, and reduced maintenance.

What is the Migration Process from Windows 10 Pro to Windows 10 IoT?

The migration process is simple, but there’s a caveat: a clean install is required if you're currently on Windows 10 Pro 22H2, because IoT Enterprise LTSC 2021 is based on the build 21H2.

That said, we at Arrow can help. We offer migration support and engineering services to make your transition smooth and successful.

What Happens When Windows 10 Pro Support Ends?

Windows 10 Pro support ends on October 14, 2025. For the first time, Microsoft is offering Extended Security Updates (ESU) for Home and Pro editions, previously available only to IoT OEMs with signed agreements.

Here’s how ESU pricing breaks down:

• Windows 10 Home:
  • ~$30 for 1 year (may not be extended further)
• Windows 10 Pro:
  • Year 1: $61 per device
  • Year 2: $122 per device
  • Year 3: $244 per device

So yes, you can keep running Pro beyond 2025—but it’ll cost you more each year.

Windows IoT: Built-In Long-Term Support

Windows 10 IoT Enterprise LTSB/LTSC editions already come with 10 years of support.

However:

• LTSB 2015 (ends October 2025) will not receive ESU
• For LTSC 2019 and LTSC 2021, ESU plans are still to be announced

Your Path Forward

If you're an OEM currently using Windows 10 Pro for fixed-purpose appliances, now is the time to transition to Windows IoT. You can:

• Move to Windows 10 IoT Enterprise LTSC 2021 and receive support until January 2032
• Begin testing Windows 11 IoT Enterprise LTSC 2024, which extends support to October 2034

Both options keep your appliances secure, stable, and supported for years.

If you have questions or need help navigating your transition, reach out to us—we’re here to help. For questions on ESU or IoT, contact us at windowsIoT@arrow.com.

The new Windows Server IoT 2025 is now available! Microsoft has maintained its schedule of releasing a new Windows Server Operating System every three years, and they have stayed true to this commitment with the release of Windows Server IoT 2025. Interestingly, despite its name suggesting a future release, the product became available on November 1, 2024. While incorporating new capabilities within a tight timeframe can be challenging, Microsoft has impressed with this release.

Let’s first explore the 2025 edition’s IoT-focused aspect. In the IoT channel, server products are designed and required to function as fixed-purpose appliances. Qualifying under these terms requires dedicating the server's purpose to your solution. These solutions can range from analyzing video streams in surveillance systems to supporting medical imaging technology or enabling next-generation gaming.

Notably, the IoT version shares 100% functional parity with the standard commercial release, with the only distinction being the licensing terms. IoT editions encompass all features available in the commercial product, providing full functionality tailored to specific, fixed-use applications. In this channel, two licensing options are exclusively available for OEMs:

• CAL-Less Licensing: This option removes the need for Windows Server Client Access Licenses (CALs). It allows OEMs to deliver solutions where end-users remain compliant without the complexity of managing CALs, simplifying deployment and ongoing management.
• Virtual Machine as an Appliance (VMaaA): This licensing model enables OEMs to provide a fully virtualized solution, eliminating the need for dedicated hardware. The solution can be deployed directly onto the end-user’s infrastructure, offering greater flexibility and easier implementation.

The IoT channel offers several editions tailored to different use cases. The most widely used Windows Server IoT 2025 Standard edition has additional options for Telco, Storage, and Datacenter environments.

One key advantage of the IoT channel over other licensing options is its extended lifecycle. The new Server IoT 2025 product offers an impressive 10 years of support and availability. Therefore, if you integrate this product into your fixed-function appliance, you can continue purchasing and selling the 2025 edition until October 2034, with security updates provided throughout the entire period.

Figure: Windows Server IoT Roadmap (December 2024)

Top New Features of Windows Server IoT 2025 Edition

Windows Server 2025 brings new features to enhance security, boost performance, and streamline operations in modern IT environments. These updates address the growing demands of hybrid and cloud-based infrastructures, AI workloads, and enterprise-level storage solutions.

Microsoft has adjusted the price of the Windows Server IoT 2025 edition, citing added value and enhanced features as motivation for the price increase. Key enhancements focus on advanced security measures, greater efficiency for virtualized and AI-driven applications, and tools that simplify management and troubleshooting.

AI and GPU Capabilities

• AI-Ready Capabilities: Supports multi-instance GPU pooling and partitioning, enabling complex AI models and GPU-intensive applications.
• GPU Partitioning and Pooling: Enables sharing GPU resources across virtual machines (VMs) to support AI workloads.

Performance and Resource Optimization

• NVMe Storage Performance: On identical systems, it delivers up to 70% more storage IOPS performance than Windows Server 2022.
• Block Cloning Support: With the ReFS file system format, block cloning offers significant performance improvements during file copying.
• Persistent Memory and HCI Performance Boosts: Delivers performance enhancements for virtualized SQL Server instances using persistent memory and improves Hyper-Converged Infrastructure (HCI) configurations and includes updates to Windows Admin Center.
• Accelerated Networking (AccelNet): Simplifies single root I/O virtualization (SR-IOV) management for VMs hosted on Windows Server 2025 clusters, reducing latency, jitter, and CPU usage.
• ReFS Native Deduplication and Compression: Introduces native deduplication and compression, enhancing storage efficiency, particularly for virtual workloads.

Security and Threat Protection

• Enhanced Security for Hybrid Environments: Offers advanced threat defense and improved secure management features.
• Credential Guard: Enabled by default in Windows Server 2025 on compatible devices, it blocks credential theft attacks by protecting NTLM password hashes, Kerberos Ticket Granting Tickets (TGTs), and app-stored domain credentials.
• Virtualization-based Security (VBS) Enclaves: Help applications protect secrets by reducing the need to trust administrators and hardening against malicious attacks.
• Windows Local Administrator Password Solution (LAPS): Automatically generates unique passwords for each computer's local administrator account, stores them securely in Active Directory, and updates them regularly to reduce the risk of attackers exploiting compromised or predictable passwords.
• File Services/Server Message Block (SMB) Hardening: Includes SMB over QUIC for secure Internet-based file share access, hardened firewall defaults, brute force attack prevention, and protections against man-in-the-middle, relay, and spoofing attacks.

Patch and Update Management

• Arc-enabled Hotpatching: Allows servers to apply patches without requiring a reboot, significantly improving high availability, and reducing maintenance downtime.

Active Directory and Service Management

• New Active Directory (AD) Functionalities and Capabilities: Includes features like AD object repair, optional 32k database page size, and enhanced security for confidential attributes and default machine account passwords.
• Delegate Managed Service Accounts (dMSA): Automatically manages passwords for service accounts through Active Directory, eliminating manual password updates.

Monitoring and Troubleshooting

• DTrace: Introduces DTrace as a native tool, allowing real-time monitoring and troubleshooting of system performance.

Windows Server IoT 2025 Hyper-V: The Ultimate Solution for Virtualization

Windows Server IoT 2025 is equipped with Hyper-V, supporting for up to 2,048 virtual processors and 240 terabytes of memory, positioning it as an essential solution for modern IoT infrastructures. This robust feature offers powerful virtualization capabilities, supporting the most demanding and scalable workloads.

Recently, VMware transitioned from its perpetual licensing model to an entirely subscription-based licensing approach, posing challenges for OEMs relying on perpetual licensing. Many of these OEMs already purchased Windows Server licenses to support virtual machines running atop VMware. Integrating Hyper-V into Windows Server IoT 2025 addresses this gap by allowing OEMs to use Windows Server as their bare-metal hypervisor at no additional licensing cost when they purchase a Windows Server license, thus eliminating licensing hurdles while delivering an efficient, cost-effective virtualization solution. By leveraging Hyper-V, organizations gain flexibility, scalability, and cost efficiency, streamlining IoT deployments without dependency on additional virtualization licensing models.

Download our Hyper-V Virtualization for OEM Appliances Brief for more information.

Note: Licensing Options During Installation

One additional feature worth noting is the installation screen experience. During the installation process, users are prompted to either enter a product key or select the "pay as you go" option for licensing. The "Pay as you go" option allows monthly payments via Azure subscription, though it is unavailable for the IoT channel. This option appears because the IoT and standard versions are identical in installation. However, for the IoT channel version specifically, users must enter a product key instead, as the subscription-based "Pay as you go" model is excluded from this licensing pathway.

Contact Us

If you have any questions about Windows IoT Server 2025 or other IoT products, contact us at windowsiot@arrow.com. Our experts will respond within one business day.