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Sharepoint developer setup

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I have started doing custom development on SP2010 using C# & ASP.NET

I have a Server

OS : Win2K8 Server

SQL : SQL Server 2008 R2

SP2010 ent edition

I have a team of 3 more engineers each having a desktop

Each of these desktops have VS 2010 installed on their machine.

Now, i want all these developers to use SP2010 installed on Server for their development.

What i gathered from all the search i have done is

- You need to have SP2010 on all developer machines as well.... (Is it true??) License cost will be too high

- How do we merge the code if all will do standalone development on their machines.

Please help


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