New Dynamic Memory in Hyper-V

The latest Service Pack 1 of Windows 2008 R2 offers a new Hyper-V feature known as Dynamic Memory. Some bloggers treat it like the "Memory Overcommitment" of VMWare where one may allocate more memory to all guest VMs than the actual total physical memory of the underlying host. I don't quite agree with this view. Unlike VMWare where VMs can still start up even though the total assigned VM memory exceeds the physical memory, Hyper-V won't allow the VM to start when the allocated base or startup memory exceeds the available memory left in the host.

Instead, Hyper-V treats memory as a shared resource that can be reallocated automatically among running virtual machines. Dynamic Memory adjusts the amount of memory available to a virtual machine, based on changes in memory demand and values that you specify. In dynamic memory, you assign 4 memory values to each VM:

1. Startup RAM: Specifies the required memory to start the VM.
2. Maximum RAM: Limits the maximum amount memory that the VM can be allocated.
3. Memory Buffer: Specifies how much memory Hyper-V would assign to the VM compared to the amount of memory actually needed. Memory buffer is specified as a percentage in relation to the actual needed memory. For example, if the memory committed is 1000 MB and the memory buffer is 20%, Hyper-V will attempt to allocate an additional 20% (200 MB) for a total of 1200 MB of physical memory allocated to the virtual machine. However, do note that this buffer is not maintained when there is not enough physical memory available in the host. 
4. Memory Weight: Determine the priority of individual VMs to be distributed with additional amount of memory when there are contention and insufficient memory available. This is the only memory value that can be adjusted dynamically when the VM is running.

Configuring Dynamic Memory

Step 1: First, you must upgrade the Hyper-V server to Windows Server 2008 R2 SP1.

Step 2: Either upgrade the guest VMs to the latest Service Pack e.g. Windows Server 2008 SP2 and Windows Server 2003 R2 SP2; OR install the SP2 version of Hyper-V integration services by clicking Insert Integration Services Setup Disk from the Action menu of Virtual Machine Connection. The former approach is recommended by Microsoft.

Step 3: Enable dynamic memory by going to the Memory Setting of the VM. Configure the startup memory  and maximum memory. To do so, the VM must be in Off state.

Step 4a: Observe the memory in real time. When you start the VM, you would see the following VM status info on Hyper-V manager:

• Assigned Memory shows the amount of memory allocated to the VM at this time.
• Memory Demand shows how much memory the VM needs at this time, which is based on total committed memory obtained from the performance counter in the VM.
• Memory Status shows how much of the buffer amount specified for the virtual machine is available. OK indicates that there is enough physical memory available to give the virtual machine the full amount of memory buffer. Low indicates that Hyper-V does not have sufficient memory to meet the full memory buffer requirement. Warning indicates that no more memory buffer can be distributed to the virtual machine. 

Step 4b: You can also observe the new Hyper-V Dynamic Memory counter added in Performance Monitor in the Hyper-V host.

For further troubleshooting details, refer the the Microsoft Technet on Dynamic Memory.