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I have this 2 CPU server (2x4 = 8 cores in total) in which I plan to put a single W2012 virtual machine.

Is it a good idea to configure 8 vCPU for the VM or should I leave spare cores to relief virtualization overhead?

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    It's not a good idea. Is there any reason you're installing this as a VM instead of directly to the hardware? – ewwhite Jan 9 '15 at 16:02
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I found this post to be a great summary of vCPU assignment and resource consumption on VMware (and to a lesser extent, HyperV).

I wouldn't assign more than 6 of the 8 available cores; if you are needing more resources than that you should either move to a quad-processor server (or one with a bigger number of cores / pCPU), or as @ewwhite suggested, nix VMware and install directly on the hardware (assuming you're not using vmware as a shim to enable high availability, etc).

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As I see it, there are basically two possibilities:

1) Your VM needs 8 CPUs. In that case I wouldn't deploy it on a machine with 8 physical cores. Well, if your CPUs have HT we're talking about 16 virtual Cores. Depending on your workload this might work but I probably wouldn't risk it.

2) Your VM doesn't need 8 CPUs... so why give it so many?

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