Q: If I upgrade a Hyper-V host to Windows Server 2012 from Windows 2008 R2, will virtual machines keep running during the upgrade?

A: While virtual machines (VMs) running on Hyper-V access many resources directly through the hypervisor such as memory and processor, other types of access, such as to storage and network resources, utilize the management partition (the Windows OS installed on the hardware) in addition to management services for each VM running on the management partition. 

If you upgrade the host OS, which is the management partition, reboots are required, which means any VMs running will be stopped as part of the upgrade. Additionally an upgrade from Windows Server 2008 R2 to Windows Server 2012 also upgrades the hypervisor layer, which necessitates the stopping of any VMs.

The result is, if you upgrade the host OS, any VMs running on the host will be stopped during the upgrade process. To avoid any extended downtime to the VMs, move the VM to a new host before the host upgrade. Migration wizards can help in the rapid move of VMs from a Server 2008 R2 cluster to a Server 2012 cluster, but there will still be some small window of downtime to the VMs as LUNs are moved between clusters.

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