A while back I encountered this error when trying to Live Migrate a VM from my Hyper-V 2012 Cluster to the new Hyper-V 2012 R2 Cluster.
You might be asking why I was running Hyper-V 2012 in the first place…
I just happened to start upgrading our Hyper-V 2008 R2 Cluster after Windows Server 2012 was released, and then Windows Server 2012 R2 was released with some very much improved features. So I had a few VMs on the 2012 Cluster that needed to be moved to 2012 R2. It was a great time-saver to be able to Live Migrate from 2012 –> 2012 R2 (well, if I could get it working).
The error message when trying to LM a VM:
"The virtual machine cannot be moved to the destination computer. The hardware on the destination computer is not compatible with the hardware requirements of this virtual machine. Virtual machine migration failed at migration source."
I found this one fairly easily but it took a little bit of time.
When comparing my 2012 node to my 2012 R2 node I noticed that the Virtual Switches were named differently. Apparently for Live Migration this will cause an issue, at least in 2012 –> 2012 R2.
After renaming the Virtual Switches to match, the Live Migration completed successfully: