Deep Dive into Hyper-V Network Virtualization (Part 1)

If you would like to read the other parts in this article series please go to:


Software Defined Networking, sometimes referred to as SDN, is very popular amongst cloud hosting providers nowadays. Software-defined networking (SDN) is an approach to computer networking in which hardware networking control is decoupled and given to a software application. Microsoft has designed a similar software application called “Windows Network Virtualization” (WNV) which enables in virtualizing the Layer 2 and Layer 3 networking models.

Microsoft Hyper-V has been a great success and many customers from SMBs to large organization have implemented Hyper-V to virtualize their physical environment. Initially, Hyper-V was released with some basic functionality to enable organizations to virtualize their physical environment. In its current version, included with Windows Server 2012 R2, Hyper-V is robust as VMware and has almost all the features offered by VMware. Beginning with Windows Server 2012, Microsoft’s primary focus has been to develop Hyper-V further for cloud hosting providers and enable customers to move services more easily to a shared IaaS cloud.

I have seen many sysadmins/consultants and cloud architects looking for more information on Hyper-V Network Virtualization topic. Since the technology is new and adoption of HNV is very less, it is hard to find every aspect of the HNV in a single document or a site. That’s where this article series comes handy. This article series provides enough details on Hyper-V Network Virtualization technology and how components provided by WNV work together to implement the Hyper-V Network Virtualization.

The first part of this article series clearly focuses on the overview and benefits of Hyper-V Network Virtualization. We are going to touch upon the following topics in first part of this article series:

  • Terms used throughout the article
  • Hyper-V Network Virtualization Overview
  • Why do you need Hyper-V Network Virtualization

Terms Used Throughout The Article

Before tackling Hyper-V Network Virtualization, there are a few basic terms that I ought to define in case you aren’t familiar with them.

WNV Module

A module named “Windows Network Virtualization” available in Windows Server 2012 and later versions which helps in implementing Hyper-V Network Virtualization technology.


HNV stands for Hyper-V Network Virtualization.

IP Rewrite

IP Rewrite is a software mechanism in which virtual packets are re-written to native physical addresses.


NVGRE stands for Network Virtualization Generic Routing Encapsulation. NVGRE uses mechanism to perform encapsulation and de-capsulation on incoming and outoing packets.


Virtual Subnet ID (VSID) is a component of WNV Module and is assigned to virtual machines participating in Hyper-V Network Virtualization.

Table 1

Hyper-V Network Virtualization Overview

Windows Network Virtualization or WNV, a networking module which was introduced with Windows Server 2012, provides the necessary components to implement Hyper-V Network Virtualization technology. WNV is an extensible module. The functions implemented by WNV Module can be used by the third party vendors to develop software applications for Hyper-V Network Virtualization. The virtual machine events cause the WNV module to generate the event notifications which can be received by the third-party software which, in turn, can take a pre-defined action. WNV fits very well with the Microsoft’s Extensible Virtual Switch architecture.

Since this article series is geared primarily towards Hyper-V Network Virtualization and its components, explaining every bit of WNV and Hyper-V Extensible Virtual Switch will not be possible. However, you can take a look at this link if you want to read more about WNV module and Hyper-V Extensible Virtual Switch.

You are required to enable the WNV module on Windows Server 2012 by executing a PowerShell command, but starting with Windows Server 2012 R2, WNV is integrated into the Hyper-V virtual switch. Since WNV Module works with the Hyper-V Role, you must make sure to enable Hyper-V Role on a computer running Windows Server 2012 or Windows Server 2012 R2.

Using WNV Module, two different Hyper-V Network Virtualization configuration approaches can be used; “NVGRE” or “IP Rewrite”.

  • NVGRE: NVGRE (Network Virtualization Generic Routing Encapsulation) uses GRE mechanism to perform encapsulation and de-capsulation on incoming and outgoing packets. Microsoft is the dominant vendor for introducing NVGRE protocol. Other companies supporting the development of NVGRE include Arista Networks, Mellanox, Broadcom, Dell, Emulex, Intel and Hewlett-Packard.
  • IP Rewrite: In case of IP Rewrite mechanism, the CA IP Address is re-written to native physical network address. The IP Rewriting mechanism is not used much because of requirement of one PA Address for each CA virtual machine. Since the IP Rewrite requires a large pool of PA Addresses, the common implementation of Hyper-V Network Virtualization can be seen using NVGRE protocol which is the focus of this article series.

Why do you need Hyper-V Network Virtualization?

  • Bring Your Own IP Address: Every organization would like to move their enterprise services to a shared IaaS cloud without any need for changing the IP Address scheme and the network topologies. Microsoft Hyper-V Network Virtualization makes this possible. Customers can bring their own IP Addresses and network topologies while making sure there’s not much time spent in network planning before the move takes place.
  • More virtual networks without using VLANs: Secondly, cloud hosting providers greatly benefit by eliminating the need for using VLAN tagging system. We use VLAN Tagging system for isolation purposes. VLAN tagging presents complexity when it comes to host multiple customers on a shared IaaS cloud. Not only does using VLAN Tagging present complexity, but also you need to ensure that network devices are configured to allow the VLAN traffic.

Using HNV, there is no need to use the VLAN Tagging system for isolation purpose. Cloud hosting providers now can use VSID, which is a component of WNV Module, to provide the isolation between customer virtual machines.

  • Cross-subnet Live Migration of Virtualized Workloads: It becomes easier for cloud hosting providers to move virtualized workloads from datacenter to datacenter without any downtime. Previously, live migration was limited to the same subnet restricting where virtual machines could be located. Hosting providers can use Live Migration technology to live migrate virtual machines across different virtual subnets without a service disruption. Cross subnet live migration allows administrators to consolidate virtualized workloads based on dynamic resource requirements and can also accommodate infrastructure maintenance without disrupting customer workload up time.
  • VSID: There is a limitation associated with the physical switches for VLAN IDs. Physical switches allow 1000 VLANs to be used out of 4096 IDs. Hyper-V Network virtualization does not use VLANs. Instead, HNV uses VSID (Virtual Subnet ID) to separate virtual machine communications. The VSID range starts from 4096 to 16,777,214. Using VSIDs, 16 million virtual subnets can be hosted as opposed to the limitation imposed by the VLAN which is only 4096 VLANs.
  • Easy way to implement: HNV can be implemented either using SCVMM (System Center Virtual Machine Manager) or HNV PowerShell cmdlets. Using PowerShell cmdlets, virtual administrators can build automated scripts to configure HNV policies. HNV PowerShell cmdlets can be found here. SCVMM is a datacenter management product which is designed to ease the deployment of HNV.
  • No Need to modify Existing Network Device Configuration: HNV technology is compatible with today’s datacenter network and can be implemented successfully without requiring any changes to the network devices.


In the first part of this article series, we learned about the Hyper-V Network Virtualization and benefits it provides to cloud hosting providers. In the next part and so, we will learn about the Hyper-V Network Virtualization components and see how these components play an important role to implement Hyper-V Network Virtualization.

If you would like to read the other parts in this article series please go to:

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