The slipstreaming process in AX 2012 R3 CU8 Slipstream updates in AX 2012 R3 CU8:
If you are installing Microsoft Dynamics AX components for the first time and cumulative updates, binary Hotfixes or service packs are available for AX, you can incorporate the updates into the installation by using a process that\’s known as slipstreaming.
When updates are slipstreamed, Setup automatically detects and applies them. In this way, the time that is required to install the whole AX solution is reduced. Note that components that were previously installed are not updated during a later slipstream installation. For example, an instance of the AOS — if an instance of the AOS is installed on a server, later if you add updates to this installation source and then you also install another AX component on the same server, the AOS instance is not updated.
You can slipstream the following kinds of updates: Cumulative updates, binary Hotfixes, help content updates, and service packs. To find cumulative updates and slipstream them into your installation, go to Microsoft Dynamics Life Cycle Services, and after selecting your project, click updates. In the updates to include with new installation section, select the slipstreamable update package that you want and download it.
Once you download the update, you can create a shared network location with the Setup of AX. The slipstreamed updates can then be included as part of this installation package under the updates folder. Then when you run Setup and select the components to install, Setup automatically detects and installs the updates.
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The Update Folder:
Before you install Microsoft Dynamics AX, you copy the DVD to a network location. This lets you modify the installation media to create a slipstream installation. Incorporate updates into the installation process by copying files to the Updates folder in the shared network location.
In the Updates folder, create a subfolder for each update package that you download. We recommend that you use the Knowledge Base article numbers of the updates as the names of the subfolders. For example, for the update that is associated with Knowledge Base article number 123456, create a subfolder that is named KB123456.
Extract each update into the appropriate subfolder. The following illustration shows an example of the recommended folder structure:
Any time that you apply a cumulative update package or a binary hotfix to your environment, we strongly recommend that you add the installation package to the Updates folder. This practice ensures that you can deploy new servers, clients, and other components of the correct version quickly. You should also make a copy of the updated installation media per your system recovery strategy.
Reference Link:
http://technet.microsoft.com/en-us/library/hh378076.aspx