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I am currently running SQL Server 2008 64-bit Enterprise Edittion on a VM ware environment with 4 CPUs and 32GB RAM. I want to scale it up. Is there a limit on how many CPUs and RAM I can go up to? I would like to go up to 32 cores and 128GBof RAM if possible.

Also if virtual machines don't allow for scaling up, what are my options with physical machine?

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Honestly ... this is kind of the space Virtualization breaks down. I would suggest looking into having a dedicated physical machine to scale this up. –  Zypher Jul 27 '11 at 22:33
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With SQL Server 2008 you can go up to 64 cores and max 2TB RAM (on Windows 2008 R2). With SQL 2008 R2 you can go up to 256 cores, but requires DataCenter edition. See Memory Supported by the Editions of SQL Server, Maximum Number of Processors Supported by the Editions of SQL Server and Memory Limits for Windows Releases

I'm not an expert on VMware but I think the max memory they support is 255GB, see Virtual machine memory limits and hardware versions

Of course, you'll need some pretty serious IO subsystem to keep up with that.

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With VMware (as of vSphere 4.1) you can have at most 8 virtual CPUs and 255 GB RAM per VM.

http://www.vmware.com/pdf/vsphere4/r41/vsp_41_config_max.pdf

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Watch out as you add more cores on a virtual platform - the cost of coordination means 8 vCPUs would give you quite a bit less processing power than on native physical. VMware recommend starting with a smaller number of vCPUs and then increasing... also, make sure you are licenced for SQL - it's so easy with virtualisation to add more vCPUs, but forget to pay for them!

See: http://www.vmware.com/files/pdf/perf_vsphere_sql_scalability.pdf

and an excellent resource at:

http://www.brentozar.com/community/virtualization-best-practices/

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