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I just got hired on to do some basic IT work(installing software, making sure people can print, etc) to help them save some money instead of going to an IT company for every little thing. The company has a Windows Server 2003 machine set up as their server that everyone connects to.

Recently, people started receiving errors that the server had reached it's connection limit. This is beyond my skill (as I said, I'm only here to do basic things), so I contacted the IT company that they use, and the reply was that we needed to purchase more licenses to let more people connect. This doesn't make any sense to me.

The server is located on site, and is within the network. Is this company blowing smoke up our butts?

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Read the license agreement for the software you are using and see what it requires. – David Schwartz Feb 4 '13 at 21:29
Depending on the size of the company, buying more licenses may be a waste of IT dollars. Server 2003 is woefully old and unsupported, though many small companies still use it. However the cost of upgrading to Windows Server 2008 R2 may be justified, rather than clinging to that dusty old box and purchasing even more ancient licenses. – Lee Harrison Feb 4 '13 at 22:56
Check to make sure that people are actually disconnecting, instead of letting their session idle. You can set up a policy to terminate idle sessions after a certain time period. – Keltari Feb 4 '13 at 23:26

If they are connecting to this server using Remote Desktop, then yes, Remote Desktop licenses are based on simultaneous client access, so if you notice that when 3 people log off the server, and 3 more can log in before other users start receiving the error again, this is likely your problem.

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If the company added more users since the server deployment that actually might be the case. You might want to read on Microsoft licensing policies. Another option would be to do an assessment of what services are actually being used and if more basic edition (like Foundation or Essentials - which do not require per user licensing) could be used instead.

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