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Why should Hyper-V users care about nested virtualization?

At first glance, nested virtualization doesn't seem to have much to offer to production environments -- so what is it good for?

One of the many new features introduced in Hyper-V in Windows Server 2016 is nested virtualization. For the first...

time, it will be possible to virtualize a Hyper-V host and administrators will be able to run Hyper-V and its VMs inside of a VM. As intriguing as this idea may be, one has to ask how this feature might be useful in the real world.

To be completely frank, nested virtualization probably isn't going to benefit your production environment -- at least not yet. That isn't to say that there aren't any use cases for nested virtualization, or that nested virtualization will not become even more useful in the future. It's just that if you are running a couple of domain controllers and a few application servers in a virtualized environment, then having nested virtualization capabilities probably isn't going to add anything to your experience

So what is nested virtualization good for? I can think of three potential use cases off of the top of my head, although there may be more.

Hyper-V's nested virtualization feature may give admins the ability to provide power users with virtualized Hyper-V servers as an alternative to a private cloud.

The first, and most obvious, use case is that you can use nested virtualization to create dev/test environments. Often developers and members of the IT staff need access to virtualized environments for testing purposes. In the past, the primary method of creating such environments has been through the use of a dedicated physical server. The server is provisioned with a hypervisor and then the IT staff is able to build VMs on an as needed basis.

The problem with using this approach is the cost. The IT department may lack the budget for dedicated dev/test hardware. Even if the budget isn't necessarily a problem, it can be difficult to justify a dedicated server if the hardware will be underutilized.

Nested virtualization can potentially solve this problem by allowing the IT staff to create dev/test VMs within an isolated environment, but without the cost of dedicated hardware. The entire dev/test environment can exist within a single virtualized Hyper-V server. Admittedly, this VM will need to be provisioned with large amounts of memory, virtual CPUs and storage if the virtualized environment is to be effective, but Hyper-V does support large-scale VMs. Even a really large VM may not consume enough hardware resources to justify using a dedicated physical host server.

Creating test environments with nested virtualization

A second use case for nested virtualization is training. Imagine, for instance, that you need to teach a new member of the IT staff about Hyper-V. You probably do not want to turn an inexperienced administrator loose on a production Hyper-V server. By using nested virtualization, you can create an environment in which the new admin can safely learn the ins and outs of Hyper-V.

Even if your organization isn't planning on bringing on any new, junior level admins, nested virtualization may still prove to be useful for training purposes. Imagine, for a moment, that the year is 2019 and Microsoft has just released Windows Server 2016 R2 -- I have no idea if or when there will be a Windows Server 2016 R2, this is just hypothetical. Your organization wants to upgrade its Hyper-V servers to the new version, but wants to test the migration process before attempting it in production. In the past, hypervisor migration testing would have required dedicated lab hardware. In fact, the lab hardware requirements were often significant if the goal was to work through the migration of a clustered Hyper-V deployment because you needed enough hardware to build an entire Hyper-V cluster. With nested virtualization, however, it is possible to create a virtualized Hyper-V cluster and test the migration process without using any dedicated physical hardware.

The last use case that I can think of is that nested virtualization may end up being useful as a poor man's private cloud. Most private cloud deployments are based around the idea that there are certain users or departments that need to have the ability to create and configure their own VMs. Although this probably seems simple enough, in practice, building a private cloud is a complex and expensive undertaking.

Hyper-V's nested virtualization feature may give admins the ability to provide power users with virtualized Hyper-V servers as an alternative to a private cloud. Because these Hyper-V servers are virtual, the administrator still has the ability to restrict resource consumption, just as is possible in a true private cloud environment. Hyper-V in Windows Server 2016 even supports hot adding memory and network adapters, meaning that administrators may have the ability to add extra hardware resources to virtualized Hyper-V servers without incurring down time.

On the surface, nested virtualization seems like a novelty feature. Digging deeper, there are certain situations in which nested virtualization could prove to be tremendously useful, even if it is a niche technology.

Next Steps

Nested virtualization makes cloud disaster recovery attainable

What new Hyper-V features does Windows Server 2016 offer?

How secure are Windows Server 2016 Hyper-V containers?

This was last published in January 2016

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Can you think of any other potential use cases for nested virtualization?
SQL Server is one possibility.  There's a real use case for SQL Server based on Microsoft licensing requirements whereby the entire physical server is licensed according to total cores.  Then we build an outer VM to wrap the SQL Server instances, and put each SQL instance in its own inner VM.  This way, we can have variable size inner VMs depending on workload, and maintain total platform mobility with disaster recover via imaging the outer VM. 
I created the architecture for several data centers last year based on nested VMs (for SQL Server) and was able to see a very substantial cost saving.
One use I can think of is in Training institutes. Each individual can be assigned a VM and they can create their own lab inside.
Implementing small scale desktop virtualisation (VDI) into a virtualised server infrastructure, perhaps.
Many test automation frameworks would benefit from nested virtualization. The master runs on the host VM and spins up nested VMs which execute multiple tests in parallel.
I find it very useful for Hyper-V Replica and Extended Replica to do DR. In the past I would need 3 physical host servers. With nested Hyper-V, it can be done in a single physical host server with either 2 Hyper-V nested VMs and the parent partition or 3 Hyper-V nested VMs.