How do I move a SBS 2003 physical server to new server hardware converting to a virtual environment?

I have a client with an SBS 2003 network with about 30 users running on an older Dell PowerEdge 2650 server. The server is running out of space and and performance is not good, not to mention it is almost 7 years old. They had another IT company purchase a new PowerEdge T610 server with 2 Quad Core Xeon CPUs, 24Gb of memory and 1.8TB of RAID 10 storage space but no server OS. It is a nicely configured new server but it is sitting in their office still in the box it came in! They have fired the previous IT company and brought me in to revive their network and migrate them going forward. They dont have much of a budget but I would like to migrate their SBS2003 to a virtual environment (Xenserver, VMWARE or Hyper-V - keeping in mind Xenserver is free so my first inclination). They are also in the process of getting an office management application that can run on either of these VM platforms.

1. Can I install Xenserver on the new server, allocate a portion of the new server and migrate the SBS2003 server easily to a virtual environment and maintain their domain, exchange and user logins? Will I have any major downtime in converting the physical SBS2003 to the virtual SBS2003? Is this seamless? I could then create another virtual server and load Win Server 2008 R2 for the management application (yet to be purchased) to run on.
2. I dont think Microsoft's Hypervisor will support SBS 2003 in a virtual environment so I may have to rule this way out?
3. Is there a free product from VMWare or inexpensive enough for my situation that may be a better solution?

My thoughts are to keep them on the SBS2003 platform for another year or so and then virtualize/swing migrate them to SBS2011 when their budget allows for this. Currently the SBS2003 performs adequately for them (they have about 30 users, 20 mailboxes and use about 300GB of storage space on the server, with about 5 server printers).

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setasoujiroConnect With a Mentor Commented:
You're probably better off using vmware ESXi (which is also free), note that when using free hypervisors you cannot use the backup API's , so you will have to work with some scripts or something to backup the vms.

For the install: download ESXi , and install on the server, it will allocate the localstorage automatically as a datastore.
Then you can download a tool called "Vmware converter" , this is to be installed on the SBS; and will allow you to "convert" the physical machine to a virtual one.
Normally this would be seamless and without problem. However it is recommended to do the conversion and then boot the VM WITHOUT a Virtual network adapter, check if the machine boots, and all is well. If that is the case you could just replace the old SBS , with the new one.

Also look into vsphere essentials it costs about 600$ and gives you more management features then esxi
rindiConnect With a Mentor Commented:
If it is an OEM version of SBS, then you can't move it to other hardware even if you use virtualization.

I don't have experience with XEN. VMware has VMware vSphere Hypervisor, which is free, and they also have a free tool you can use to convert hardware to Virtual OS's, the VMware vCenter Converter Standalone. But again you can only use this if your SBS isn't OEM.

Also, after the conversion you'll probably need some time running the SBS wizards again so that particularly the NIC gets the correct bindings again.
I've done succesfull conversions even if it's an OEM , it just takes some modifications and workarounds.
I must note that regarding the license this probably isn't the best thing to do:)
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Moving OEM to other hardware isn't allowed, even if it might work. It's a breach of the m$ eula. It's cheaper than a standard version for a reason...
darcotechConnect With a Mentor Commented:
if I was you, that will be VMware ESXi (which is free).That is as far as free virtualisation goes.
As for your server I would use Vmware vCenter converter. This can actually import complete physical machine and make a virtual one. Than you can add some RAM to virtual machine, or more CPU (Mhz) and here you go.
I did this for our old servers and we get rid of old boxes in about 2 weeks time (for 15 servers).
It is very easy and what is important you do not make any change on your original one, so you can always go back.

Its weekend time so this will all for now.
If you need more help our guidance, PM or just let me know. Once you done you can buy me a beer no, problem  :-)

And don't forget to click YES!
You have two potential licensing issues. If the current SBS 2003 is an OEM license you can't move SBS to the new hardware; you need a new SBS license. The existing SBS CALs do not cover access to any Windows 2008 R2 servers, so you will need new Windows 2008 CALs. You can solve both of these problems buy getting SBS 2011 now. I would also consider ditching Exchange and hosting the email. Doing Exchange yourself is really expensive once you add in the antivirus, spam filtering, and backup packages needed to support it.

I don't believe that SBS 2003 is supported in ANY virtual environment. That isn't to say that it doesn't work. Any physical to virtual conversion should be doable and will keep server intact, though you will probably need to reconfigure networking using the SBS wizards.

Citrix Xen Server doesn't seem to have much traction in the SMB market; they seem to be doing okay in the large scale hosting business. I suggest sticking with Hyper-V or VMware because you'll find many more people knowledgeable in those two product lines. Hyper-V is always free, and VMWare vSphere Hypervisor is free for your needs.
rogersinghAuthor Commented:
Appears that VMWare ESXi seems to be the consensus choice so far. I dont know if the SBS2003 is an OEM - I will have to check that on Monday at the client site. If I recall correctly it is OEM. What are the ramifications if I move them for now with an OEM license (just for the short term) till I can get them to approve a whole swing migration to SBS 2011? God I hope it is not OEM!

setasoujiro:Thanks for the quick response! Could I not backup the whole VM and continue with local network backups for the data? If I go the route of VMWare ESXi I can always get the paid version in my budget as part of the SBS 2011 migration - right? What are the workarounds if it indeed OEM? Doable?

rindi:I totally understand the $s oem being cheaper and appreciate the licensing issue. Just trying to get them up on their new server before the old one dies out. Will let them know about licensing as well if that is an issue.

darcotech:just a single beer? I would buy you a pitcher! Appreciate the input - might take you up on the PM offer as I will need guidance!

I am going to download the VMware ESXi right now and play with it on a test server I have.

There probably aren"t any workarounds, other then you would need to reactivate with MS due to the change of HW, but that won't work unless ytou do it by phone,...
It is not allowed to use OEM on other machine, but it can be done and is at own risk.
What i meant with the backup is that to backup VM's easily , you should purchase VEEAM, or Backupexec VMware agent. But this cannot be used with the FREE esx, only with the paid versions.
But You can still make backups of your GUEST os, just not of the Virtual Machine Image.

Indeed you can alwyas upgrade afterwards to a paid version.

But as I said, before planning anythin,g, just boot the new server, install ESXi; do the conversion, and test if it works. Then you can go from there
The activation probably won't work, or you'd need a new key if you move it to a VM environment, so you wouldn't be able to properly use or configure it.

You can always use the standard backing up procedures like you have done until now while it is a VM, it's just the special VM backup options that wouldn't work on the free version.
rogersinghAuthor Commented:
God I love this site and the helpful folks!

setasoujiro:I will do the test as suggested and get back to you all in a couple of days.

rindi: If i have access to some retail SBS 2003 that have never been used and I find out my current SBS2003 that I want to migrate is indeed OEM, could i use those? I presume the additional license would transfer as the have added 30 CALS to their server for a total of 35.

I don't think so, as you'd need an OEM license on the OEM VM.
I would install ESXi, import physical machine and just play with it with no network access.
This how you can still keep running old server. If you find retail version of SBS 2003, you could install it and try to restore your existing server on it (data mostly).
This is good test for your backups and yourself. Also play with ESXi just to get familiar. Do not go in the production just like that!
I do not know how urgent is this migration, but do understand, planning is everything when real things come to be done. And you need some time to get familiar with everything if this is your first time. VMware software is pretty robust and will let you play with it.
As for licensing issues, while it is not legal to move OEM from one to another machine I do not think that MS will get upset if you plan to move to SBS 2011 which has a lot of new features and big change from 2003. Tip: Download try version of SBS 2011 (60 days I think) and try that also on ESXi (you know you can have several VM machines :-) )
So situation in two days should be like this
- Old SBS 2003 is still running as usual
- ESXi installed
- Clone of old SBS 2003 is on ESXi, just the network card is off. You are using this to see your potential licensing issue, hardware compatibility, how much more virtual hardware you can add, etc. You can try anything as even if you destroy all, it doesn't have consequence, but you do acquire some very useful knowledge
- new try version of SBS 2011 is installed to make evaluation of new features, how you could migrate to it from SBS 2003 and of course, to show to the company why it will be good to make a purchase. You should use words" investment in new version" and not “buy” or similar to not sound like expense.

I hope this will help you. It’s midnight. Going to sleep.

LuckyDuckConnect With a Mentor Commented:
I agree with darcotech and I can add some additional information.
I have a number of WS2003 boxes that I virtualize in a ESXi "Lab" that is a copy of our physical network.
None of the WS2003 servers have had license issues when moved to a virtual machine.

After you virtualize I would change the machine name, and the IP, and shut down services that might be going out on the Internet so that you can make the hardware change to add a Virtual NIC. It's the best way to test and you can remotedesktop into the server for testing.

Working from the console make sure that you install the VMware Tools. It will make a huge difference when working from the console. You will need to go into the Video Adapter properties and max out the hardware acceleration or the mouse will be jerky and a royal pain to use.

rogersinghAuthor Commented:
Mods, please keep question open for a few more days - delays on client end but I plan to do the suggested solution by next week.
Just because the OS doesn't complain doesn't mean that what you are doing is legal, and that Microsoft and the Business Software Alliance can't come after you for violating the license agreements.
The whole issue concerning the licensing is all up to the business owner. It would be them that is violating the agreement. You need to carefully expalin the implications then allow the business owner to make the decision whether or not to buy the O/S. My suggestion is to have the client buy the SBS 2011 with the appropriate CALs and then consider this a migration to a virtual environment that has multiple steps. Everyone should be happy then. Microsoft gets thier license fee, your client has a license that they can show. And the cost is really not that high when you consider that they have already laid out for the server. You get to feel good that you are in "general" compliance and you get to move ahead instead of sitting in this analysis paralysis. You can virtualie the SBS2003 as you move forward and then install the SBS 2011 and start migrating services and testing.
Your plan was to buy the SBS 2011 next year, you have just moved up the date. Think aboout this, if the client is unwilling at this time to pay for the license do you really want to twork for them. If they are constant questioning expenses how long will it be before they question your labour charges. Why was the last consultant let go. Are you better off  to walk away from a situation where you can't win and it could damage your reputation? Are you going to be putting in lots of effort for very little return. Just  because you got the job do you really want it?
I don't think it's just up to the owner, as you who does the work will at least become an asset. You'd have to at least refuse your help if the owner wants to do it that way. Further you should probably also warn the owner's employee's in case he wants one of them to do this, as also they would become an asset...
rogersinghAuthor Commented:
The SBS2003 appears to be retail and not OEM so i think I will be okay for now on licensing. I will take the advise and move them eventually to SBS2011. I appreciate all the help from everyone. While I am not done i think I can accept multiple suggestions as the solution.

darcotech - you offered that I could PM you - how does one do it on this site (sorry for being a newb) - would really like to get your insight on some additional questions.
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