Q: How can I use Key Management Service (KMS) for desktop activation if I have less than the 25-desktop threshold?

A: Before an organization's KMS server can activate OSs, there must be a minimum of five KMS clients before KMS will start activating server OSs such as Windows Server 2008 R2. And 25 KMS clients are required before KMS will start activating client OSs such as Windows 7.

Notice that it's just KMS clients (i.e., OSs) that are activating by KMS and not the specific client vs. server OS. For example, if four desktop OSs try to activate against the KMS server, then a server tries to activate, that's a total of five KMS clients--therefore, the server OS will activate successfully as the KMS threshold of five KMS clients has been reached.

Likewise, if I activate 25 servers against the KMS server, then tried to activate a Windows 7 client, it would activate, because the KMS server threshold of 25 KMS clients to activate client OSs would have been reached.

Microsoft's website has a great example, from which I'll quote a part:

"A KMS host responds to each valid activation request from a KMS client with the count of how many computers have contacted the KMS host for activation. Clients that receive a count below their activation threshold are not activated. For example, if the first two computers that contact the KMS host are running Windows 7, the first receives an activation count of 1, and the second receives an activation count of 2. If the next computer is a Windows 7 virtual machine, it receives an activation count of 3, and so on. None of these computers is activated, because computers running Windows 7 must receive an activation count ≥25 to be activated. KMS clients in the grace state that are not activated because the activation count is too low connect to the KMS host every two hours to get the current activation count and will be activated when the threshold is met."

This means if you don't have 25 client OSs, one option would be to activate servers against the KMS server to get to the 25 threshold count. However, remember that clients can run without activation for a 30-day grace period, so all 25 clients don't need to be available right away.

Also if you don't have 25 client machines to use KMS,  KMS is probably not the right solution and you should look into a Multiple Activation Key (MAK) as a better option. One exception I have heard of is VDI solutions such as XenDesktop from Citrix--they require KMS for the client OSs no matter what the size of the deployment because the client OSs are constantly being created and deleted.