Those who have Team Suite (or one of the role-based Team Editions) with MSDN Premium subscription will soon be able to download Team Foundation Server Workgroup Edition. This edition of Team Foundation Server only differs from Team Foundation Server Standard Edition in one fundamental way – you can only have five users accessing it. To support larger teams, you need to purchase a license for Standard Edition (full retail price: US$2799).
Team Foundation Server Workgroup Edition shouldn’t be confused with installing Team Foundation Server in a Windows workgroup. Just as you can with Standard Edition, you can install the Workgroup Edition using a Windows workgroup, or an Active Directory domain.
Since I’ve been asked this before, I’ll note that there isn’t a cumulative effect. For example, if you have four licensed copies of Team Suite, Team Foundation Server Workgroup Edition will not support twenty users; however, you could install four independent instances of Team Foundation Server on separate computers.
We implemented the five-user limitation by creating a special Team Foundation Server global group in the Workgroup Edition named, "Team Foundation Licensed Users." This group is only used with Workgroup Edition because its membership is limited to five users. For more information about Team Foundation Server groups, see Team Foundation Server Security for Users and Groups.
When adding users to Team Foundation Server Workgroup Edition, the administrator must add users (you can’t add Windows groups or other Team Foundation Server groups) to this group in addition to the usual Team Foundation Server project and global groups; otherwise, they’ll receive this error message when they try to access Team Foundation Server:
TF31001: Team Foundation cannot retrieve the list of team project from Team Foundation Server. The Team Foundation Server returned the following error: The request failed with HTTP status 403: Domain\User is not a licensed user.
If you want to upgrade from Workgroup Edition to Standard Edition, all you need to do is run setup in Maintenance Mode and supply the product key for Standard Edition, which will lift the restriction of requiring users to be a member of "Team Foundation Licensed Users."
Update: For more information, see How to: Add Users for Team Foundation Server Workgroup Edition.