I’ve seen companies slash their per-user cloud desktop costs by over 50% just by switching from Windows 365 to Azure Virtual Desktop.

Yeah. Half the price.

We're talking about the same apps. Same users. Same daily workflow. But one platform eats your budget like Pac-Man, and the other… doesn’t.

So why are so many IT teams—especially in mid-sized orgs—still choosing Windows 365 Enterprise?

That’s the question I couldn’t shake. Because on paper, Azure Virtual Desktop (AVD) seems like the no-brainer. You only pay for what you use, you get full control over the environment, and with pooled sessions, the cost per user drops dramatically.

But here’s the thing: real-world decisions aren’t made on paper. They’re made by humans juggling budgets, risk, limited time, and a dozen other invisible factors.

And that’s what this guide is really about—not just the specs, but the why behind the choices. Why Windows 365 wins for some. Why AVD still scares off others. And how you should think about it if you're about to make the same call.

What They Actually Are

Let’s clear the fog first. These two services might sound interchangeable at a glance, but they’re built for very different use cases.

If you're new to the space and wondering what virtual desktop infrastructure really means, this primer will get you caught up fast.

Windows 365

This is Microsoft’s fully managed Cloud PC product. You pick a virtual machine size, assign it to a user, and that’s it. Every user gets their own persistent desktop in the cloud—same experience every time they log in, just like a regular Windows machine.

No infrastructure to manage. No autoscaling logic. No load balancing. Just assign and go.

Think of it like renting a car that’s always yours. You pay for it whether you’re driving it or not, but it’s predictable, clean, and the keys are always where you left them.

Azure Virtual Desktop (AVD)

AVD is more like building your own ride-share fleet. You control the infrastructure, decide when machines start and stop, and can stack multiple users on the same VM (multi-session).

It’s flexible. It’s powerful. It’s incredibly cost-efficient if you know what you're doing. But it’s also a bit of a beast to manage.

I like to say AVD is the Swiss Army knife of desktop virtualization—versatile and loaded with options, but you can cut yourself if you open the wrong blade.

Curious how these stack up to other options? Check out our rundown of the best VDI platforms and providers to see what else is out there.

The Real Cost Difference

I’ve seen IT teams spend days comparing CPU specs, storage tiers, and license bundles. But here’s the uncomfortable truth: none of that matters if the pricing model doesn’t match your usage.

Windows 365: Predictable but Pricey

Windows 365 gives you a fixed monthly cost per user. Easy to budget for. No surprises.

But here’s the kicker: you’re paying 24/7, even if your users only work 8 hours a day.

So if your team logs in at 9AM, logs out at 5PM, and closes their laptops on the weekend? You're still getting billed for nights, weekends, holidays—every second that Cloud PC exists.

It’s like renting a hotel room for someone who only needs a desk.

Azure Virtual Desktop: More Work, Way Cheaper

AVD flips that model. You pay for the VM’s compute only when it’s actually running. Stop the machine? You stop the clock.

You can even have multiple users share the same VM (multi-session), which dramatically lowers per-user costs.

A Nerdio study showed that AVD can be 11% cheaper than Windows 365 if you run fixed, always-on VMs. But once you start scaling with pooled sessions and autoscaling rules?
We’re talking up to 50–60% cheaper—sometimes more, depending on region and usage patterns.

One Real Example (Not Theoretical)

A midsize firm with 1,300 users tested both setups:

• Windows 365: $31 per user/month

• AVD (pooled, autoscaled): ~$12 per user/month

That’s a $25,000+ monthly difference. Enough to hire two extra IT staff and boost your coffee budget.

Of course, you don’t get that kind of savings without effort. Which brings us to…

Admin Simplicity vs. Cloud Engineering Headaches

Let’s be honest—nobody’s waking up excited to manage scaling scripts, host pools, or FSLogix profile containers. Unless you live and breathe Azure, AVD can be a pain in the config.

Windows 365: Set It, Forget It

Windows 365 Enterprise is boringly predictable. You assign a Cloud PC to a user through Microsoft Intune, and they get a consistent desktop every time they log in.

No autoscaling. No load balancing. No spinning up hosts or troubleshooting broken session brokers.

If your IT team is small or already stretched thin, this simplicity is gold.

I've worked with orgs where a single sysadmin ran IT for 300+ users. For them, Windows 365 was a lifesaver. They didn’t want to “optimize workloads.” They wanted the thing to just work.

AVD: Powerful, But Demanding

AVD gives you control over nearly everything. You choose VM sizes, disk types, autoscaling logic, and whether to assign users to single-session or multi-session hosts.

But here's the deal: it takes time to set up right. You’ll need expertise in:

• Azure AD

• Azure Resource Manager (ARM) templates or Terraform

• FSLogix for profile management

• Conditional access policies

• And usually a 3rd-party cost optimizer like Nerdio or Citrix Cloud

One company I worked with had to rewrite their autoscaling logic three times because of how their dev teams worked across time zones. When it finally clicked, they saved a ton. But getting there? Rough.

And if you've ever had to fix slow, laggy performance in Citrix environments, you know how critical tuning and monitoring can be—AVD isn't exempt.

Who Performs Better? Depends on Who You Are

Let’s squash the myth right now: both platforms can perform great—if they’re set up correctly.

But the type of performance you need? That’s where the split happens.

Windows 365: Reliable, But Rigid

Windows 365 Cloud PCs come in predefined SKUs. You get to choose between machines like:

• 2 vCPU / 4 GB RAM

• 4 vCPU / 16 GB RAM

• 8 vCPU / 32 GB RAM

• (and recently, a few GPU-powered options in preview)

Once assigned, that’s your machine. It’s persistent. It’s consistent. And for many knowledge workers, it’s more than enough.

But if you need to scale up temporarily? Or provision more power for a big rendering job or simulation? Tough luck. You’re stuck with what you picked—unless you manually reassign users to a bigger SKU, which isn’t exactly seamless.

AVD: Flexible, But You’ll Pay in Admin Time

AVD, on the other hand, lets you define custom VM sizes. You can mix and match hardware across your host pool. That means you can:

• Run lightweight pooled VMs for task workers

• Spin up GPU-powered VMs for engineers

• Or build monster single-session desktops for devs compiling massive codebases

And because AVD supports multi-session Windows 10/11, you can pack 5, 10, even 20 users on one machine—if their workloads allow it.

That’s a massive efficiency win… unless someone runs Chrome with 73 tabs open and tanks the whole host.

We’ve seen similar tradeoffs when troubleshooting slow AWS WorkSpaces—it’s rarely just about hardware, and almost always about setup.

Use Case Breakdown

Here’s how I usually break it down:

The short version?
Windows 365 is the “just give me a desktop” solution.
AVD is the “give me options and get out of the way” platform.

This is the same kind of nuance you’ll find when comparing VMware Horizon and Citrix—the right choice depends on your team, not just the specs.

For remote teams, the decision can also overlap with choosing between VDI and VPN for remote work—which adds yet another layer to the decision tree.

What’s New in 2025

If you’ve been watching Microsoft’s updates closely, you might be wondering the same thing I am:

Are they trying to blur the line between Windows 365 and AVD… on purpose?

Because lately, features are starting to overlap in ways that make you go: “Wait, wasn’t that an AVD thing?”

Windows 365 Is Getting… Complicated?

• GPU-Powered Cloud PCs are now in preview for Windows 365 Enterprise. That used to be AVD’s thing.

• Windows 365 Boot lets you log directly into your Cloud PC from a physical device—ideal for shared workstations or kiosks.

• Windows 365 Switch gives you the ability to jump between your local desktop and Cloud PC as if it were just another virtual desktop session. Think macOS’s Spaces, but for cloud desktops.

• Cloud PC Reserve Capacity (just announced): lets you pre-allocate backup Cloud PCs in case your main one fails. That’s right—disaster recovery for a Cloud PC.

It’s cool. It’s also getting a bit heavy. The whole appeal of Windows 365 was simplicity. But now it’s starting to carry the same kind of bells, whistles, and—yes—complexity that made AVD intimidating in the first place.

AVD Still Feels Like the Power Tool

• MSIX app attach support keeps expanding, making it easier to separate apps from the base image.

• Start VM on connect is now more stable—great for cost savings on pooled hosts.

• New autoscale settings make AVD less painful to tune. (Still not perfect.)

• And Microsoft continues to push AVD with Intune integration, making it feel more “Windows 365-ish” in terms of management.

Bottom line: they’re converging—but not merging. Microsoft clearly wants you to see Windows 365 as the “front door” and AVD as the power-user backroom.

Which raises the question…

Are They Just… Cannibalizing Themselves?

Honestly, yeah. A little.

They’re walking a tightrope: push too many features into Windows 365 and people start asking why they need AVD. Keep AVD too complex, and smaller orgs bounce to simpler third-party solutions.

So here’s my take: don’t pick based on future roadmap slides. Pick based on what works today—for your team, your budget, and your sanity.

Can You Use Both? And Should You?

Short answer: yes. And in more cases than you’d think, you probably should.

I’ve worked with orgs that tried to force everything into one model—either all-in on Windows 365 or fully committed to AVD—and it always came with tradeoffs. Too expensive. Too complex. Too inflexible.

But when you use both strategically? That’s where it gets interesting.

The Hybrid Model That Actually Works

Let’s say you’ve got:

• 100 full-time employees who need the same apps every day

• 60 contractors who come and go

• A dev team that needs custom VMs and remote GPU access

• A helpdesk that doesn’t want to touch Azure Resource Manager scripts with a ten-foot pole

Here’s what that could look like:

• Windows 365 for the 100 full-time folks: predictable, managed Cloud PCs with minimal admin work

• AVD for contractors and devs: spun up as needed, scaled down during downtime, tailored to weird app requirements

• One unified login experience via Azure AD, conditional access across both

It’s not just theoretically efficient—it’s actually being done by mid-size orgs, MSPs, and global teams that don’t want to overspend on idle machines or burn out their IT staff.

What to Watch Out For

• Management overhead: Running both means managing policies, user assignments, and sometimes billing in two different portals (Intune + Azure).

• Licensing gymnastics: You’ll need to stay sharp on Microsoft licensing. VDA rights, hybrid use benefits, Microsoft 365 E3 vs. E5—it gets messy.

• User confusion: If people don’t understand when to use what, you’ll get helpdesk tickets like “Why does my dev machine look different today?”

But if you’re thoughtful about user profiles and workloads? The hybrid setup gives you flexibility without going full chaos mode.

Hybrid setups aren’t unique to Microsoft, either—Amazon WorkSpaces vs. Citrix comparisons show how other platforms are balancing performance and cost in similar ways.

It’s the same problem people face when fixing poor performance in VMware setups—even the best tools fall short if end users are frustrated.

Tried Both? Here’s How to Share the Experience

If you’ve ever rolled out Windows 365 or AVD across an actual team—not just in a test lab—you know this: you never really know how it’s going until people start talking.

Some users love it. Others quietly struggle. A few just give up and go back to their local laptops.

That’s where Vagon Teams can step in.

Think of it as the missing layer between IT deployment and user feedback. Instead of guessing whether your new Cloud PC setup is working well, Vagon Teams gives you a way to:

• Collect honest user feedback from your team

• Monitor how different desktop setups are performing

• Run quick surveys or check-ins post-migration

• Understand which configuration (AVD or Windows 365) is actually delivering the best experience for your people

No guesswork. No “I think it’s fine” emails. Just real insight into how your Cloud PCs are being used—and how they feel to the folks using them.

You don’t have to use it during setup. But once you’ve got things running, Vagon Teams helps you close the loop between IT and end user. Especially useful when you're experimenting with both platforms or tweaking configurations to find the sweet spot.

Final Thoughts

If you’re reading this hoping for a clear winner, I’ll save you the suspense: there isn’t one.

Because this isn’t about which product is “better.” It’s about which one fits your people, your workloads, and your tolerance for complexity.

Windows 365 Enterprise is great when you want something that just works—no deep Azure expertise, no infrastructure baggage.
AVD is what you reach for when you need flexibility, scale, or control—and you’ve got the IT muscle to handle it.

And honestly? The smart move might be to try both.

Test a few seats. Compare performance. Track usage. Ask your team how it feels. Don’t let your decision ride on a spec sheet or a licensing pitch. Make it based on what actually works when someone’s trying to get real work done—on deadline, with 12 Chrome tabs open, and Teams hogging half their RAM.

The cloud makes all of this easier than it used to be. But it also makes the margin for waste wider than ever.

Be picky. Ask questions. And once you’ve chosen a path, keep checking in.

Because the right answer today might not be the right answer six months from now.

FAQs

1. Can I switch from Windows 365 to AVD later?
Yes, but it's not a seamless transition. The two platforms are architected differently, so you’ll need to migrate user profiles, apps, and configurations manually or with third-party tools like FSLogix. There’s no native "migrate" button between them, so plan for some lift.

2. Is Windows 365 really more expensive?
In most cases, yes. Windows 365 charges a flat monthly fee per user, even if they only use the Cloud PC for a few hours a day. Azure Virtual Desktop, by contrast, is billed based on actual usage. If you configure AVD with autoscaling and pooled sessions, you can often cut costs significantly—sometimes by more than 50 percent.

3. Do I need Intune or Endpoint Manager to use them?
Windows 365 Enterprise does require Microsoft Intune (formerly Microsoft Endpoint Manager) to handle device provisioning and policy management. AVD doesn’t require Intune, though it can integrate with it. Most AVD environments are managed through the Azure portal or through third-party tools like Nerdio Manager.

4. Which one is better for developers?
AVD is generally the better fit. It offers more flexibility in configuring virtual machines, allows custom images with pre-installed tools, and supports isolated environments for dev and test. Windows 365, while stable and consistent, isn’t built for the same level of customization or power scaling.

5. What about designers or GPU-heavy workflows?
AVD is again the stronger choice here. It supports a variety of GPU-backed virtual machine types—like the NV-series—that can handle 3D modeling, rendering, and other intensive tasks. Windows 365 has started rolling out GPU Cloud PCs in preview, but they’re not yet broadly available or as flexible as what you can deploy in AVD.

6. Can I run both in the same organization?
Yes, and many organizations do. It’s common to assign Windows 365 to permanent staff who need stable, always-on desktops, while using AVD for contractors, seasonal workers, or specialized teams. The challenge is managing both environments consistently and ensuring your team understands how each one works.

7. Is AVD really that hard to set up?
It depends on your level of Azure experience. If your IT team is comfortable with Azure resources like virtual networks, host pools, and scaling scripts, AVD is manageable. But if you're new to cloud infrastructure, there's definitely a learning curve. Compared to the plug-and-play simplicity of Windows 365, AVD requires more time and expertise upfront.

8. Which platform is more secure?
Both platforms are secure when configured correctly, and both inherit Microsoft’s enterprise-grade compliance standards. AVD gives you deeper control over the environment, which can be useful in regulated industries, but that also means more things to configure—and more things that can go wrong. Windows 365 limits customization, which reduces misconfiguration risk, but also limits flexibility.

9. Is there a minimum user count for either platform?
There’s no hard minimum, but Windows 365 tends to be favored by smaller teams who want predictable costs and minimal setup. AVD, on the other hand, becomes more cost-effective at scale. If you’re running a lean operation with under 50 users and limited IT staff, Windows 365 is easier to adopt. If you have 100+ users and variable workloads, AVD will likely save you money in the long run.

10. Can I use my existing Microsoft 365 licenses with both?
Yes, but the licensing nuances matter. Microsoft 365 E3 and E5 licenses typically include the rights to use both Windows 365 and AVD, but additional components—like Windows VDA licenses or RDS CALs—may be required depending on your setup. If you’re unsure, it’s worth double-checking with your Microsoft partner or rep to avoid surprise charges.