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Can someone tell me the difference between the 2? Is it like server based antivirus updates itself on the server so other clients connected to it and just download the update locally. Whereas in client based each would have to update via the web?

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That is one of the differences. The other is that some anti-virus programs (I know that Trend can do this) can offload the actual scanning of the files to the server so that the client doesn't have to do the work. This is good is you have a really high powered anti-virus server and a lot of older slow workstations so that they aren't effected by the CPU resources needed to scan the files.

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Server-based AV usually means the scan processing is done there.

Servers that download updates on behalf of clients which connect to it are usually called management servers. They let an administrator use a single central point of control for all the connected clients, configuring scanning and exception policies, running reports, and checking client status in one place. All the popular "enterprise" AV vendors offer something like this, often called endpoint suites. It's usually cost effective if you have more than 20 clients.

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