My friend wanted me to do this originally but I'm confused a bit so I'll ask the community.
Basically he wants to do a refresh of his Internet cafe to bring it up to today's standards because those pentium III's were lagging browsing the net. (Internet Service is no problem, 24/3 down/up service)
New hardware is only going to be used for browsing the net, watching youtube and occasionally light gaming.
Is it better to have a single server serving 10 clients (i.e virtualization) or 10 individual computers.
Total cost of ownership, energy consumption and how much it costs are very important.
Generally for this size of workload, it's going to cost less to get basic desktop computers for ten patrons than to try and run virtual desktop or remote desktop session hosts for ten patrons.
Part of the process is going to be determining what the most demanding thing you will see the computers doing. In this case, you won't really be needing a whole lot of performance. Video streaming is probably the most demanding usage these computers will see. With this in mind, you can find something with a basic processor and probably 4 GB of RAM, and while you can use integrated graphics just be sure that the onboard is still decent performance. If you also need to replace monitors, you may consider a low-cost all-in-one. There are several basic all-in-ones now available for as little as $600.
So let's just compare here for a quick example. If you wanted to instead virtualize the computers, you're going to need to buy a server to run all of that on. To get the performance that you need, you're probably looking about $3,000 in hardware costs for the server. Now you have to purchase licensing. Server 2012 Standard runs almost $700. Then you have to buy user or device licenses for the remote desktop session host, which is about $150 per device, so $1,500 for all ten of your computers. That comes to $5,200 in hardware and licensing just for the server. Now you still need to get end-point terminals to run the remote desktop session, which can be purchased for around $300 each. Add to that a new monitor for $150 each and you're still spending $450 per client computer on top of the $5,200 for the server.
In this scenario it just works out better to use individual computers. It's going to be less complex to set up and maintain, it's going to probably operate a little better, and the money you save on the computer hardware you could invest in ensuring you have a properly secured and managed network with a business-class firewall to ensure network separation between public-access computers and your business computers and data.