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Windows Server licensing change reduces Azure VM pricing

Microsoft's Hybrid Use Benefit could lure organizations to Azure by allowing use of existing Windows Server licenses.

There has been a lot of Azure news recently, which is a great opportunity to step back and sum up the state of...

running Windows Server on Microsoft's public cloud platform. There's a new usage benefit from Microsoft that will allow some qualified organizations to get reduced Azure VM pricing.

The Microsoft Azure Hybrid Use Benefit unveiled

As of February 1, Microsoft allows anyone with the Software Assurance add-on to a Windows Server license that was acquired through a volume licensing agreement to deploy an Azure virtual machine (VM) without Windows Server and designate, or apply, an existing Windows Server license -- purchased through volume license -- to that Azure VM. The stipulation is this applies to volume licenses, not retail licenses that are commonly referred to as "boxed copies" obtained from Amazon, NewEgg or other software license retailers. This benefit is called the Azure Hybrid Use benefit. Like many of you, I was wondering why it took so long for Microsoft to legalize this kind of license usage.

These Azure VMs can have up to 16 virtual cores, so the benefit certainly scales. This works in a couple of ways, depending on the edition of the license acquired through the volume license program:

  • A Windows Server Standard license holder can either use the license to deploy an on-premises VM -- or physical machine with virtualization rights, depending on how you apply the product use rights -- or an Azure VM, but not both. The license covers one or the other.
  • A Windows Server Datacenter license holder can choose to deploy an Azure VM covered by the volume license and still use that license to cover an on-premises VM.

Two ways to use Azure Hybrid Use Benefit

How can you take advantage of this? Essentially, you create Azure Base Instances, which are basically VMs with no operating system. You can do this two ways. First, you can create a Hyper-V VM with existing on-premises tools and then upload it to Azure with Windows Server already installed. Second, you can upload a Windows Server ISO to an Azure-linked storage facility, set up a base instance VM, and install Windows Server in it from the ISO image entirely up in the cloud. It is probably easier to use the first approach and configure the VM locally, as Microsoft Azure's current support for bare-metal VM creation is quite a bit behind Amazon Web Service's support for the same.

The pricing here works out somewhat compellingly. Using retail rates, assuming you do not have an Azure enterprise subscription with different or less expensive rates, you can roughly get a sense of the value of this benefit by comparing the monthly cost of a D1 VM -- one processor core, a solid-state disk, 3.5 GB of RAM and 50 GB of storage space -- with Windows server in the East U.S. operating region on standard tier pricing, which runs for $104.16 a month, to the monthly cost of an identically equipped D1 VM with Linux, which costs $57.29 per month. That difference -- $46.87 per month per VM -- is the cost of the Windows Server license you normally "rent" from Azure. You can see that would add up fairly quickly across the cost of multiple Azure VMs. For an organization that uses Azure heavily, this price difference could end up being a fairly compelling benefit. It may allow you to shift some workloads to the cloud given you can redeploy existing licenses for which you have already bought.

Other improvements to Windows Server in Microsoft Azure

There have been other enhancements to running Windows Server in Azure. They include:

  • It's cheaper. Microsoft cut the price of D series VMs running on the newest generation Intel Xeon processors -- known as the Haswell line -- by 10% over December prices. These price cuts include the negotiated and/or volume discounts from consuming Azure based on an enterprise subscription.
  • You can run Windows Server 2016. A great way to get a preview of Windows Server 2016 and do some testing and development work without tying up on-premises resources is to deploy a test environment to Azure. Windows Server 2016's latest technical preview is now a supported option on Azure.
  • Containers are supported. Microsoft is developing container support. You can test containers by deploying an Apache Mesos cluster, but work is continuing to bring support for Windows Server containers and further Docker, Docker Hub and Docker Swarm support, too.

Next Steps

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