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In the backup and recovery of a computer server, a cold server is a backup server whose purpose is solely to be there in case the main server is lost. The cold server is basically turned on once to have software installed and configured, and then is turned off until needed.
A hot server is a backup server that receives regular updates and is standing by ready (on hot standby) to take over immediately in the event of a failover.
As part of its Software Assurance licensing program, Microsoft currently offers free software licenses for cold servers intended for disaster recovery. It does not offer free licenses for warm or hot servers.