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Built into the Windows Server 2016 operating system is a new and improved Nano Server. Its job is to provide a remote server operating system optimized for private clouds and datacenters. It resembles Windows Server in Server Core mode, but is significantly smaller, has no local logon capability, and only supports 64-bit applications and components. It uses less disk space, runs significantly faster, and requires fewer updates and restarts than Windows Server. The Nano Server installation option is only available for the Standard and Datacenter editions of Windows Server 2016.
Business Value of Nano Server:
1. Useful for various types of servers: As a "compute" host for all Hyper-V virtual machines, as a storage host for a Scale-Out File Server,as a DNS server, and as a web server running Internet Information Services (IIS).
2. Active Current Branch for Business (CBB) Model: This helps customers who are moving at a “cloud cadence," and it features rapid development cycles. In this model, feature update releases of Nano Server usually release two to three times per year. These releases do not automatically update existing deployments; administrators must perform manual upgrades of a new release at their convenience.
Important Notes for Nano Server:
1. You cannot logon locally or use a graphical user interface.
2. Only 64-bit applications and components are supported.
3. Group Policy is not supported, but you can use Desired State Configuration to apply bulk settings.
4. Nano Server cannot create a proxy.
5. NIC Teaming is not supported; instead, Switch-embedded teaming (SET) is supported.
6. System Center Configuration Manager and System Center Data Protection Manager are not supported.
7. The version of Windows PowerShell that Nano Server uses has important differences; please see PowerShell on Nano Server.
8. Nano Server is supported only on the Current Branch for Business (CBB) model; there is no Long-Term Servicing Branch (LTSB) release for Nano Server at this time.
Key Features of Nano Server:
- Lightweight Operating System/Datacenter Host
- 64-bit exclusive
- Rapid Update Cycles and Deployment
Referenced from: Microsoft