# Windows 365 or Azure Virtual Desktop: which one for which client

_Updated 2026-09-10. Canonical page: https://rugged.sh/learn/windows-365-vs-azure-virtual-desktop/_

**Question:** Should a client get Windows 365 Cloud PCs or Azure Virtual Desktop?

**Short answer:** Windows 365 is billed per user per month at a fixed price for a dedicated Cloud PC, so it is predictable and needs almost no capacity planning, but it costs the same whether the user works two hours a day or ten. Azure Virtual Desktop is Azure infrastructure billed by the hour, so pooled multi-session hosts shared across users plus autoscaling make it cheaper at scale, at the cost of design and operational work. Small clients, task workers and anyone who needs a predictable per-seat number tend to fit Windows 365; larger pooled workloads with predictable working hours tend to fit AVD.

## They are not competitors so much as two ends of a dial

Both deliver a Windows desktop from Microsoft's cloud, and Windows 365 is built on top of the same remote connectivity stack: Microsoft's own documentation states that Windows 365 Enterprise uses Microsoft Intune to manage Cloud PCs, Microsoft Entra ID for identity and access control, and Azure Virtual Desktop for remote connectivity.

The difference is who carries the capacity problem. With Windows 365 that is Microsoft's problem and you pay a fixed subscription for it. With AVD it is yours, and in exchange you can share one machine between many users and turn it off when nobody is working.

## The billing difference in Microsoft's own words

Microsoft describes the Windows 365 model plainly: Cloud PCs are billed in a per-user per-month cost model, which means your organization does not have to manage the variability of compute and storage costs of a traditional hosted desktop model.

That sentence contains both the benefit and the cost. No variability means no surprises and no capacity work. It also means no savings when the desktop is idle. An AVD session host that is deallocated overnight stops incurring compute charges; a Cloud PC costs the same on a bank holiday as it does on a Monday.

> **Provisioning is license-driven, which surprises MSPs.** In Windows 365 Enterprise the Cloud PC is created automatically when you assign a license to a user in an appropriate Entra group. Microsoft states directly that admins do not manually create Cloud PCs. License assignment is the provisioning action, so license hygiene is capacity management.

## Side by side

_Windows 365 Enterprise against Azure Virtual Desktop, for an MSP-managed client_

|  | Windows 365 | Azure Virtual Desktop |
| --- | --- | --- |
| Billing | Fixed per user per month | Azure consumption, per hour plus storage |
| Machine model | One dedicated Cloud PC per user | Pooled multi-session or personal |
| Idle cost | Unchanged | Falls when hosts are deallocated |
| Capacity planning | None, sized by SKU per user | Yours: host sizing, density, scaling |
| Provisioning trigger | Assigning a license | A deployment you run |
| Management | Intune | Intune plus Azure resource management |
| Best fit | Small teams, task workers, predictable seats | Larger pools, defined working hours, cost sensitivity |

## How to actually choose

The decision usually falls out of three questions, asked in this order.

- **How many hours a day is the desktop in use?:** Low utilization across a defined working day favours AVD, because that is exactly what autoscaling reclaims. Genuinely around the clock usage erases the advantage.
- **Can these users share a machine?:** Multi-session is where AVD's economics come from. If the workload needs a dedicated machine anyway, much of the advantage disappears and Windows 365 becomes competitive on total effort.
- **Who carries the variance?:** If the client wants one predictable number per seat, a consumption-billed estate is a monthly conversation you will keep having. Some MSPs run AVD and simply sell it as a fixed per-seat price, absorbing the variance themselves.

## Running both is normal

Most MSP fleets end up mixed, often inside a single client: pooled AVD for the office staff who work a predictable day, Cloud PCs for the executives, contractors and remote users where simplicity is worth more than the hourly saving.

That mix is only a problem if your tooling forces you to manage the two in different places. rugged.sh deploys and manages both from one console per customer tenant, with AVD host pools from versioned templates and Cloud PCs from managed provisioning policies, at the same flat per-tenant fee.

## Questions and answers

**Is Windows 365 cheaper than Azure Virtual Desktop?**

For a small number of users, or for desktops in use around the clock, usually yes, because there is no capacity to design and no idle time to reclaim. For larger pooled workloads with defined working hours, AVD is usually cheaper because multiple users share one host and hosts deallocate when nobody is working.

**Does Windows 365 use Azure Virtual Desktop underneath?**

Yes for connectivity. Microsoft documents that Windows 365 Enterprise uses Intune to manage Cloud PCs, Microsoft Entra ID for identity, and Azure Virtual Desktop for remote connectivity. What differs is the billing model and who manages the capacity.

**How is a Cloud PC created?**

Automatically, when a Windows 365 license is assigned to a user in an appropriate Microsoft Entra user group. Microsoft states that admins do not manually create Cloud PCs, so provisioning is controlled through licensing and group membership.

**Can one client use both Windows 365 and AVD?**

Yes, and mixed estates are common: pooled AVD for staff on predictable schedules, Cloud PCs for users where a dedicated, always-available desktop is worth the fixed price. Both are managed through Intune and Entra, so the identity and policy work is shared.

## Sources

- Microsoft Learn: What is Windows 365 Enterprise? (billing and provisioning): https://learn.microsoft.com/windows-365/enterprise/overview (read 2026-09-10)
- Microsoft Learn: States and billing status for Azure Virtual Machines: https://learn.microsoft.com/azure/virtual-machines/states-billing (read 2026-09-10)

## Related

- What licences does Azure Virtual Desktop actually require?: https://rugged.sh/learn/avd-licensing-requirements/
- How much does Azure Virtual Desktop autoscaling actually save?: https://rugged.sh/learn/avd-autoscaling-savings/
- Deploying Azure Virtual Desktop for a client, start to finish: https://rugged.sh/learn/deploy-avd-for-a-client/

_Published by rugged.sh, a multi-tenant control plane MSPs use to deploy and scale AVD and Windows 365 and to manage Microsoft 365 configuration across customer tenants. Priced per customer tenant, not per user (Microsoft 365 management: $10/tenant/month; Azure (AVD / Windows 365): $50/tenant/month; Microsoft 365 + Azure: $60/tenant/month), with a free tier for 1 tenant and 5 users. https://rugged.sh/_