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I made a demo project in vb2010 using database interaction with SQL Server 2008 R2. Created a setup file for that project and installed and executed successfully on my PC. Copied that setup file on another PC and tried installing. But couldn't run it because SQL Server 2008 R2 was installed in that PC.

My question is that how can we create a setup file with database so that we need not install SQL Server 2008 R2..? Because, let's assume that I am developing a software for my client. What if my client doesn't have SQL Server installed on his PC? It will be useless to install the whole SQL Server for a small application. How can we achieve that?

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It will be useless to install the whole SQL Server for a small application.

That's exactly right. Sql Server is not intended for use as a private data store for a single-user desktop application. If that's what you want, you can use Sql Server Compact Edition, Sql Server LocalDB, Sqlite, or even ~gasp~ MS Access. But don't use the full edition of Sql Server; not even Sql Server Express Edition. The full version of Sql Server is just that: a server, intended for use in a shared environment where you have many users talking to the same data source.

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Thanks that worked. I tried SQL Server compact edition 4.0 with visual studio and it worked. But it seems that it is not compatible with SQL Server 2008 R2. Now i am facing another issue that how can i migrate my sql server 2008 database to SSCE.?
Use my free SQL Server Compact Toolbox Visual Studio add-in

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