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How do we squeeze max performance from our TS / RDS environment?

Currently we are serving up about 30 thin clients and about 90-100 other users remotely accessing some productivity apps.  Mainly this consists of VIRTUAL from Infor (ERP software) and the MS Office apps.  Current environment is two Server 2003 R2 VM's hosted on separate physicals.  They should really be able to handle everything quite easily... but we get a lot of speed complaints and the occasional lock-up.  Plus... the load gets lopsided since we do not currently have a connection broker.

My job is make this better with some planning and Server 2008R2.  I plan to make an intermediary server to act as the connection broker and license server... followed by however many virtual servers are needed.  That is where my question arises.  How can we maximize performance in this environment?  Is it better to throw additional resources at a struggling server instance or just create another one and send some connections its way?  Maybe RDS hosts aren't really optimized to be on VSphere virtual servers to begin with?

We have two beefy ESX hosts, FYI.
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Andrew Hancock (VMware vExpert / EE MVE^2)VMware and Virtualization ConsultantCommented:
Restart Servers daily, (in the early hours), and scale out the Server Farm with more servers, and less concurrent connections per server.

Also you've hit the nail on the head, if you intend to use Virtual Servers, your number per virtual server will be much less than a physical host.

e.g. we get 70-85 concurrent users per DL360G5 Dual Processor Quad Core, 4GB Memory, running approx 426 applications, using Microsoft Office, using Windows 2003 TS.

Same configuration under VMware vSphere or Hyper-V - 15-20 users before the server is max ed out.

Terminal Services and VMware vSphere, is not a cost effective solution, when you cost in the Hypervisor cost.
I have found the Antivirus affects performance.    What are you using for the Antivirus on your Terminal Server?    Have you "tuned" it following the vendor's recommendations?

RAM is critical, how are you doing with RAM?   I've got 26 GB serving about 17 users.   I have RAM to spare but the users are killing me with the 12 browser sessions that they open up on each of their desktops.
admineoAuthor Commented:
hanccocka- good stuff!  appreciate the answer.  I suspect we'll be load balancing between 3-4 VM's to get this running really smooth.  Problem is, it's just more instances to patch/maintain,etc.  May possibly look at physicals... but will examine costs.  There's always a bottleneck somewhere, right?!

kdubendorf- we are not running any AV on the term servers.  We just bumped the one server up to 10 gigs of RAM and the pagefile still gets hammered.
Not surprised that you're getting hammered with 10 GB.  My users are chewing up 1 GB of RAM a piece.   Even with RAM to spare the system is still using the page file to some degree.

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