Terminal servers: definition, basics, and advantages

Computers have become an integral part of daily life for businesses, and many companies now have their own, indispensable IT departments. Their most important tasks are not just installing software programs and creating e-mail accounts, but also ensuring that all devices are optimally integrated into the company network. For example, employees should be able to access the central file server, check the corporate e-mail account, or use company software from both a company PC and their mobile device. Users should also have as many options as possible in terms of operating systems (Windows, Linux, macOS, etc.). Although requirements may vary from company to company, terminal servers have proven to be a powerful tool in an IT department’s arsenal.

Free Cloud Server Trial from IONOS

Try out a Cloud Server for free now - test your IONOS Cloud Server for 30 days!

Unlimited traffic
VMware virtualization

Development of the term “terminal server”

What is a terminal server? The term “terminal server” already has a history, and the meaning has changed several times over the years. It appeared for the first time in 1984 when the first graphic user interface was developed for the Windows operating system being run on the dominant Unix mainframe computer. The user interface had its own network protocol and was also known as “x11”. The groundbreaking aspect of the terminal server was its ability to send output from the host to remote terminals. This not only paved the way for more flexible use of computer resources, but also meant that a terminal server now referred to the host computers, which remained the central control unit for the time being, despite their own (albeit minimal) hardware terminals.

As personal computers became more and more common, the need for a central terminal server to distribute computing power became increasingly obsolete. Instead of relying on server assistance, they now had standalone systems on which operating systems, among other things, could be installed. However, central administrative bodies retained their importance when it came to the commercial sector. Here, server and mainframe programs remained indispensable and terminal servers were the perfect solution for granting clients access to them. However, the term “terminal server” increasingly began to refer to software solutions that were developed for this purpose – such as the Telnet 3270 program and network protocol for accessing IBM mainframes.

What does the term “terminal server” mean today?

Today, “terminal server” primarily refers to software that is installed on a central computer – the host – and provides several clients applications over a network. Since the respective applications are also installed and executed on the host, the terminal server only forwards the graphic information to individual clients. The more demanding the requirements of a network program being managed like this are, the more powerful the central computer that the terminal server is being operated on needs to be. Corresponding software solutions to help this, like compressed data features, are particularly important when sending the hosted applications over slow network connections.

Terminal server: the basic components

There are three necessary building blocks needed to create a terminal server:

  1. Server hardware that supports a multi-user system
  2. Network protocol for remote access
  3. Client application for the terminal server

Like any server, a terminal server also needs the necessary hardware to fulfill its function properly. It is therefore important to ensure that sufficient computing power is available to host the individual applications and the server’s operating system. Processing performance is the most important element, and using multi-core processors is recommended. Work memory and disk space are equally important, with the requirements being heavily dependent on the resource intensity of managed applications. An additional factor is the number of terminal server clients that simultaneously access the offered terminal services.


Organizations are increasingly turning to virtualized resources that can be rented from cloud computing / IaaS providers. These can be scaled flexibly so that the computing power required for hosting and delivering the terminal services is available at any time.

The second protocol then lays the foundation for communication between terminal server and client. It establishes policies for data exchange to allow users to remotely access the terminal services. While the initial protocols, like the previously mentioned X11, only had to regulate establishing the connection, newer proxies like the Citrix Protocol ICA (Independent Computing Architecture) or the proprietary Microsoft Protocol Remote Desktop Protocol (RDP) also allow compression specifications, encryption, and the caching of transmitted data and information.

Finally, each device must install client software that allows users to connect to the terminal server over the remote protocol and use the applications provided. The software and hardware architecture is also often enhanced by a licensing server that manages the access licenses.

What role does a licensing service play in terminal servers?

If software is made available through a terminal server, both the server and every accessing client must have the necessary licenses to use it. This plays an important role especially with proprietary programs, because they often require a license for the server itself and for each client. In this scenario, the licensing server will act as a central administrative entity for the various licenses that Microsoft require, such as Client Access Licenses (CAL) for example. There are two licensing models:

  • Device license: When equipped with a device license, the device can be used by multiple users to access the terminal service. This model is ideal for situations where multiple users share a work PC, like a hotel reception.
  • User license: If users need to access terminal server services from more than one device, users’ licenses are the best option. This means that just a single license is required even if a user accesses remote services from a work computer, as well as from a smartphone on the go, or a PC at home.  

After the initial connection is established, the licensing server forwards the desired licenses to the client. Each time they access it, they adjust it to determine that the device or user in question already has a valid license. Administrators should always be aware of how licensing works on the proprietary terminal server to optimize costs.

An overview of the costs of a terminal client environment

The previously mentioned license costs are one of the most important costs when it comes to running a terminal server. The amount depends on how many users are connected to the remote environment and use it simultaneously. Furthermore, which applications should be centralized plays a key role in whether proprietary products like a Windows operating system, or open source software like Linux distributions and LibreOffice, are more likely to be used. Next to the costs of the terminal services provided, the following expenses apply to terminal server operators:

  • Hardware: As previously mentioned, there must be enough computing power to run the server. When it comes to a local hardware solution, redundancy must be ensured to be able to replace defective components as quickly as possible.
  • Maintenance and operation: The chosen hardware solution not only results in purchase but also maintenance costs. In addition, expenses for cabling, electricity etc. should be included in the budget.  
  • Application maintenance: The individual applications that are available to terminal server users must also be maintained regularly. Therefore, it is necessary to ensure that you update, make adjustments, or install new terminal services if necessary.
  • Backup and protection: Both the terminal services themselves as well as the individual databases should be secured in the best possible way. Protection software and backup solutions are therefore a must to be optimally prepared for technical problems (e.g. power outages) and unauthorized access.  
  • Rights management: Funds should be set aside for the development of a comprehensive access concept (authentication, authorization, etc.) to benefit in the long term from a well-considered and regulated rights allocation.

What are the advantages of a terminal server?

A terminal server is very beneficial to businesses as a central application management unit for a variety of reasons. For example, administrators benefit from the considerable workload associated with network architecture being eased: all application software just needs to be installed once (on the server), which saves a lot of time and effort. This preference is also noticeable when the respective applications need to be maintained and updated. It is only necessary to install the terminal server client software on all devices that should allow remote access to the services provided. In addition, a central dashboard makes it easy to monitor the infrastructure of the network and all relevant user activities.

Conserving costs and energy

As previously mentioned, costs can be saved thanks to the specific terminal server licensing models. But the remote concept is also very cost-effective for other reasons: Since most of the processing and storage of data is done on the central server, expensive hardware does not have to be purchased for individual workstations. In certain scenarios, even a return to the original terminal server concept with clients without their own hard disk space is conceivable. In this instance, we are also talking about so-called thin clients (“slim clients”). These slimmed-down desktop setups also have the advantage of being very energy efficient and have a longer lifespan than ordinary workstations.

Maximum flexibility

The great advantages of a terminal server include the ability to access the services provided (including personal data) with almost no restrictions. Users have the freedom to select their terminal and operating system. The chosen system only needs to support the respective terminal server client software and the protocol needed for communication. Remote access requires no physical connection between server and the client, so resources can be used from anywhere.

Network and data security

Centrally hosting and managing applications also has the advantage of providing less access to external users. Since the data does not leave the server environment, a comprehensive security plan can be created with little effort. If a client experiences an unforeseen incident (power failure, virus attack, hack, etc.), the program and user data stored on the terminal server is never compromised. Meanwhile, backup solutions and protection programs ensure its security.

What are the disadvantages of the client terminal server model?

The advantages listed make terminal servers a worthwhile investment for numerous companies. The prerequisite is, however, that the application requirements of different clients are not too different. Namely, if the terminals place too broad a range of demands on hardware and software, a client terminal server network tends to be impractical. In this case, the benefit of unified installation and maintenance cannot be realized, while dependency on central management still exists. However, this shows one of the few concrete disadvantages of the model: Terminal service users are automatically limited in their options (administration, etc.) and cannot use individual applications in the event of a server failure.

A second disadvantage is that a terminal server does not always support all standard software. If the applications that need to be centrally hosted are not compatible with the server, the remote model does not make much sense for a business. Similarly, the licensing models associated with the server and its services can similarly become exclusion criteria if they are not cost-effective for the specific requirements.


Programs that need to access very specialized hardware such as document scanners are only supported by terminal servers in extreme cases.

Terminal services and usage scenarios (?)

Typical terminal services, often referred to as remote desktop services, include the standard enterprise applications such as office suites, e-mail applications, development tools and frameworks, collaboration tools, etc. Are these different applications designed to work together and communicate within a company? Cross-platform, maximum controllable, and detached from fixed workstations, a terminal server is the optimal solution. However, the terminal server-client concept also proves to be a great convenience in having proprietary software that is not web-based, centrally located, and made available to users in multiple locations. Furthermore, the terminal technology is often used in public facilities. In particular, thin clients in government offices, schools, universities, or even libraries are an effective means of granting access to internal file servers and directories or in-house applications, for example. Even computers that are used for educational purposes often run on terminal servers. Market leaders currently offering terminal server services include Citrix, Microsoft Windows Server and LTSP.

We use cookies on our website to provide you with the best possible user experience. By continuing to use our website or services, you agree to their use. More Information.
Page top