I have a 2003 network with a file server/DC, an Exchange Server and a Terminal Server that I am planning to virtualize on HyperV Server 2008 R2 and host cluster. (Please note that I am talking specifically of host clustering throughout this post - I know about HyperV clustering as well but I am not interested in that avenue at this point.) I have evaluated the hardware requirements of the servers I would need to be able to host the three VM's and also the SAN. What I am not sure about is the licensing. HyperV server is 'free' and as I have licenses for the 2003 servers I do not need any licenses there. It is my understanding however that I need for the purposes of host clustering to have the two HyperV nodes members of a domain. So does that mean I have to have a third computer that will act as the DC for the two HyperV servers - i.e. they will be members of that domain? If that's the case what is the minimum OS I have to run on this third box? From what I have read only 2008 Enterprise Server or DataCentre R2 supports clustering - Standard and Web do not. So will I need to run 2008 Enterprise Server R2 on this third box? Note that I am not planning to migrate from 2003 to 2008 any time soon so I have no need of 2008 server - regular or Enterprise - at this time. If this is the case the statement that HyperV server is free and that it includes clustering is a bit misleading if the only way I can implement clustering is to get an Enterprise or Data Centre 2008 license and a computer to run it on.