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Terminal Server: What It Is and How to Use It

Terminal Server: What It Is and How to Use It
Reading time: 7 min
Hostman Team
Technical writer

Let's imagine a theoretical problem related to servicing work PCs. The company has an accounting department that employs about 20 people. Each employee needs their own workstation with a computer to perform work duties. Each computer must have a specific list of software installed to perform the job duties. Let us assume that in our theoretical accounting department, the list of programs for each employee is the same. How can you provide every employee with the hardware and software they need?

The first option is to purchase a personal PC for all accountants and install the necessary licensed software on it.

Another option is to create a terminal server, install the entire list of programs on it, and then provide employees with access to it. In this material, we will discuss what a terminal server is and how it can be used.

Typically, a terminal server is built on the Windows operating system. However, you can also create a Linux terminal server using the LTSP software. Deploy a cloud server on Hostman and install LTSP to run your terminal server on Linux. 

What is a terminal server?

Let's turn to history, namely to the times when mainframes with terminals were used instead of PCs.

A mainframe is a supercomputer or computer with large computing resources. Mainframes are mainly used to process large amounts of information.

To work with mainframes, terminals are used. These are low-power computers whose task is to input and output information. Computing operations are performed on the mainframe, and the results are transmitted to the terminal. Several terminals can be connected to one mainframe: the more powerful the mainframe, the more of them. Each terminal is allocated its own processor time, during which the mainframe performs calculations for that terminal. Due to the mainframe's high performance and low CPU time, many users can work with it simultaneously without affecting performance. 

A terminal server is a shared server or cluster of servers used remotely by end users. In simple terms, it is a high-performance computer that several people use at the same time. The concept is similar to the mainframe, except that mainframe workloads were primarily limited to complex tasks. A terminal server is usually used for everyday tasks, such as servicing the accounting department.

Thin clients, computers whose computing power is limited to performing I/O operations, are used to connect to the terminal server.

There are dedicated devices for use as a thin client, but any home computer will also work.

Architecture of terminal servers

The architecture of a standard terminal server looks like this:

  • a computing center on which the OS and necessary software are installed;

  • licensing service or license server;

  • OS;

  • protocol for data exchange between the server and thin clients, for example, RDP;

  • program for connecting thin clients.

An operating system common to all users is installed on the terminal server, as well as the programs that end users need. In order for users to connect to the terminal server, it is necessary to install and activate special licenses, we will talk about them further in this article. 

Since the operating system is common for all users, you should be careful when choosing the software. User isolation is carried out at the session level using accounts. If an application crashes at the operating system level, it will crash on all clients.

Why do you need a terminal server?

Terminal Server is great for centralized hosting of company software and data. It's cheaper and easier to deploy, but it offers limited capabilities for isolating users from each other.

A terminal server would be a great option if:

  • users do not need administrator rights;

  • applications run smoothly.

In general, the decision to use such an infrastructure option must be made on the basis of its advantages and disadvantages in the context of the tasks facing it.

Advantages and disadvantages


  • Remote access to resources, all you need is Internet access;

  • User permissions management;

  • Simple monitoring of the entire infrastructure;

  • Applications are installed once and updated centrally;

  • Reducing the cost of servicing end-user thin clients;

  • Increasing the security of the IT infrastructure.


  • Concentration of all computing power and enterprise data on one node. failure of the computer center will lead to downtime;

  • Errors in software and system configuration will affect all users;

  • Limited choice of software.

Terminal Server Licensing

To create a terminal server on Windows Server OS, you need to purchase CAL licenses. There are two main types of CAL licensing:

  • User license. A specific user can connect to the server from any device.
  • Device license. Any number of users can work from one specific device.

Installing and configuring a terminal server

Let’s see how to install and configure a terminal server in Windows Server.

Choosing equipment

When choosing equipment, start with two parameters:

  • number of clients;

  • system requirements of the applications that you plan to deploy.

Next, computing resources and disk space should be considered, including the resources the system will need. For example, if the task is to create an infrastructure with 20 potential users, then you will need approximately the following characteristics:

  • Processor - Xeon E5 and higher;

  • RAM - from 32 GB (1 GB per user, 6 GB for the OS, and 6 GB as a reserve.

Creating a RAID array and providing an uninterruptible power supply is also highly recommended.

Installing Windows Server

  • Download the Windows Server distribution and copy it to a USB drive.

  • Set the BIOS to boot from your drive.

After launch, the installation of Windows Server will begin.

Basic operating system setup

Configure and check the following parameters:

  • System time;

  • IP address;

  • Computer name;

  • Firewall;

  • OS update;

  • Active Directory.

Step 1. Install Roles and Features

  • In the Start menu, open Server Manager and run the "Add Roles and Features" procedure. During installation you must:

  • Select the Role-based or feature-based installation type.

  • Check the Remote desktop services box.

  • In the next window, do not change anything and click Next. 

  • In the Role Services section, select Remote Desktop Licensing, Remote Desktop Session Host, and Remote Desktop Gateway.

At the end of the installation procedure, you need to click on "Promote this server to a domain controller".

Step 2. Setting up Active Directory

  • Open the Active Directory Domain Services Configuration Wizard.

  • Add a new forest.

  • Create a password.

  • Set the NetBIOS name.

  • Click "Install".

After the installation, reboot the computer.

Step 3. Create a Reverse Lookup Zone

  • Open DNS in Server Manager.

  • Go to Reverse lookup zone -> Create new zone.

  • Select Primary zone -> IPv4 Reverse lookup zone.

Step 4. DHCP

When adding roles and features, we have added the DHCP server role. If everything is done correctly, a warning will appear in Server Manager asking you to complete the DHCP configuration. 

  • Click on the link, specify the authorization details, and check the summary. 

  • Go back to the server manager, open DHCP and create a new scope. 

  • Specify the name and starting and ending IP addresses. If necessary, correct the subnet mask.

Step 5. Install Remote Desktop Services

  • Click Add roles and components in the Server Manager again.

  • Select the Remote Desktop Services installation type.

  • Select Quick start.

  • Select Session-based desktop deployment.

  • Select the server and click Deploy.

Step 6. Setting up licenses

  • Go to Tools - Remote Desktop Services and launch the Remote Desktop Licensing Manager.

  • Right-click on the server and select Activate server.

  • During activation, click "Next" and uncheck "Run the license installation wizard." 

  • Return to the Server Manager → Remote Desktop Services → Collections

  • in the top right click Tasks → Edit Deployment Properties. 

  • On the "Licensing" page, select the license type and server name.

Step 7. Install the license

  • Open the Remote Desktop Services Diagnoser.

  • Right-click on the server and select "Install license".

  • Select the license program and enter the license data.


A terminal server is a powerful solution for centralized software hosting and organizing user access to this software. It can provide cost savings, energy efficiency, centralized management, and increased security for businesses and organizations. Users can access the software from anywhere, needing only an Internet connection.