Similarly to terminal services, VHD is a server-side compute model.  All computation and storage are centralized, with images of the user’s desktop pushed over the network to the client via RDP or other protocol.  The major difference is that VHD offers each user their own complete virtual machine, including the OS, applications and settings. VHD is designed to replicate the user experience of a rich PC with all the management and security of server-side models.

* Client-based virtualization models: Streaming both the OS and applications combines the simplicity of a stateless client with the performance of local execution.  Here, the client is essentially “bare-metal” with no OS or applications installed.  

At power-up, the operating system and applications are streamed to the client over the network, where they execute locally on the client’s own CPU, graphics processor, etc.  Application data is usually stored in a datacenter.  The client may be PC with no hard drive, using main memory exclusively.

Remote operating system boot is similar to operating system streaming in that it delivers a complete operating system and application image to a “stateless” PC whose hard drive has been deactivated or removed.  Unlike operating system streaming, remote operating system clients boot directly from the SAN, and the image is unmodified from the “gold” image that would be used on a local disk.  

Under the application streaming model, the operating system is locally installed, but applications are streamed on-demand from the datacenter to the client, where they are executed locally.  Streamed applications frequently do not install on the client operating system, but instead interface with an abstraction layer and is never listed in the operating system registry or system files (hence the term, application virtualization, that some vendors use).