A VM template is a master version which can be used to build different VMs. The template includes basic configuration, operation system and software settings. The new VMs can be customized attending the virtual desktops users needs, but all VMs have the same source. The master template can be updated, patched and new technologies can be implemented but it still remains the golden image to create the VMs.
Bearing in mind these differences, we can say that templates are more useful for mass deployment of production VMs, whereas VM cloning is better suited for testing and development environments.
Source: SearchVirtualDesktop
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