The ITAM Review

News, reviews and resources for worldwide ITAM, SAM and Licensing professionals.

What is Microsoft Azure Stack?

Microsoft Azure StackWhat’s the biggest problem with the Cloud?

That it’s in the Cloud. Right?

The technology and services seem excellent, the ease of use is very appealing, the new approaches it enables are of huge interest…but it’s up there, not down here. If, IF, you could have the Cloud in your server room – that would be fantastic wouldn’t it?

Well…Microsoft have found a way to replicate the Cloud and trap it in physical boxes.

“Microsoft Azure Stack is an extension of Microsoft Azure, bringing the agility and fast-paced innovation of cloud computing to on-premises environments”

On-premises Cloud

Darkness visible. Melancholy merriment. Sweet sorrow. Transparent night. True Lies.

All oxymorons, yet perhaps none as strange as On-premises Cloud. Yes, we’ve had Private Cloud for a while but now we’re talking about actual Azure on-premises…like having a Cumulonimbus in the car park.

How does it work?

Pre-configured hardware is available from certain vendors, currently:

  • HPe
  • Dell
  • Lenovo

With Cisco & Huawei coming further down the line.

It’s far from just a single, run of the mill server. For example, Lenovo have 25U and a 42U offerings, containing between 4 – 12 “hyper-converged nodes” with processors of between 14 and 22 cores and up-to 768GB of RAM. Full specs and images can be found here.

None of the vendors seem to list pricing for these on their sites – HP requested I call them to discuss further – however, it appears that a base configuration will be around $300,000 from any of the manufacturers.

How is it licensed?

According to Microsoft, Azure Stack “ brings the cloud economics model to on-premises environments”.

There are no upfront licensing fees, just like with Azure, and in fact – because you’re taking on the costs associated with hardware, upkeep, operations etc – the costs associated with Azure Stack are typically lower.

Pay As You Use pricing

This model is available via either Enterprise Agreement (EA) or Cloud Solution Provider (CSP).

On EA, Azure Stack is acquired using Monetary Commitment and can use the same agreement, monetary commitment pool and subscription IDs as Azure.

Azure Stack metering will report usage back to Microsoft’s commerce systems and you will be billed as part of your regular Azure invoice* (assuming you have one), with clear definition as to what is Azure and what is Azure stack.

*Things will be different for US Government, Germany and China.

Microsoft point out that you are not charged for VMs and software that power Azure Stack so:

“Cloud Infrastructure, Management, Security, and Identity Services, as well as Networking and Service Fabric are not charged”

Microsoft have released the following pricing:

Service Price
Base VM $0.008/vCPU/hour ($6/vCPU/month)
Windows Server VM $0.046/vCPU/hour ($34/vCPU/month)
Azure Blob Storage $0.006/GB/month (no transaction fee)
Azure table & Queue Storage $0.018/GB/month (no transaction fee)
Azure App Service $0.056/vCPU/hour ($42/vCPU/month)

Capacity Licensing Model

This is aimed at what Microsoft call “Disconnected Scenarios”. Here, you pay an annual subscription fee to license all the physical cores on your Azure Stack hardware.

It is available only via EA (so not CSP), but Monetary Commitment cannot be applied to it and it will not have integrated billing with existing Azure subscriptions.

There are 2 flavours available – IaaS package and App Service package:


App Service Package IaaS Package
$/physical core/year $/physical core/year
Azure App Service
Azure Storage
Base Virtual Machine
Windows Virtual Machine Bring Your Own License Bring Your Own License
SQL Server Virtual Machine Bring Your Own License Bring Your Own License

Disconnected Scenario

A disconnected scenario is where certain elements of an organisation lack the constant internet connectivity required to work with Azure. In these case, Azure Stack is deployed in these areas to perform local functionality- this can then be aggregated back into Azure when possible.

Microsoft have a video from Build 2017 that delves into this further, using the example of a shipping company – watch here.

Bring Your Own Licensing

It is possible to use existing licenses with Azure Stack – be they acquired via EA, Open etc. and Microsoft say that:

“ Azure Stack is treated like on-premises hardware for purposes of licensing existing software”

This means that neither “License Mobility through Software Assurance” (for SQL Server) or Azure Hybrid Use Rights (for Windows Server) are required – so licenses without Software Assurance can be used to license on top of Azure Stack.

Current, on-premises licensing rules apply so Windows Server requires all physical cores to be licensed (which, with Azure Stack, could literally be 100’s) and SQL Server has a minimum requirement of 4 core licenses per VM or you can license all the physical cores with SQL Enterprise.

Potential Confusion

Microsoft have released an End User licensing guide for Azure Stack which covers the above but it isn’t as clear as it should be. It states:

SQL Server may be licensed either by physical cores or by virtual machines. If licensing by physical cores, you must license the entire Azure Stack region.”

However, this only applies to SQL Server Enterprise…NOT Standard, something which the above doesn’t make apparent.

While the document does state that:

SQL Server licenses acquired outside Azure Stack are subject to Microsoft Product Terms” and

This licensing guide is not a legal use rights documents, nor does it supersede or replace terms and conditions in the Microsoft Product Terms

I feel it may still lead organisations to the incorrect conclusion. I’ve flagged this up and hope to see it corrected in a future update to the guide.

Service Providers

Service Providers are permitted to put Azure Stack hardware in their datacentres and use SPLA licensing on top. In these cases, the current shared server rules apply, so Windows Server volume licenses cannot be used and SQL will require the “License Mobility through Software Assurance” rights.


Two support contracts are required for Azure Stack:

1 with Microsoft/CSP to support software services

1 with hardware provider for physical system support

Organisations who already have Azure Standard, Azure Pro or Premier Support contracts have Azure Stack support included. A separate hardware support contract will still be required.


Azure Stack has had a tumultuous journey so far, with some direction changes, 3 public previews, postponed launches and an air of confusion around what it was for.

However, now that it’s here, it seems to be quite a focused offering with a clear purpose.

It opens up the addressable market for Azure – which is of course a positive thing for Microsoft and its partners – but can also be for customers too. It makes the benefits of Azure available to those previously prevented from partaking. Be that because of compliance  (needing to keep data on premises) and/ or functionality (you can’t access Azure from the middle of the ocean), more organisations now have access to the benefits of Cloud computing.

That said, it is not a cheap endeavour and some good cost analysis and ROI calculating will need to be performed for each possible customer.
Is Azure Stack something you’ve been waiting for? Are you unable to see the point? Do you think the hardware is too expensive? Something else?

Let me know your thoughts and questions!


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About Rich Gibbons

Rich has been in the world of IT and software licensing since 2003, having been a software sales manager for a VAR, a Microsoft licensing endorsed trainer, and now an ITAM analyst looking at software licensing and cloud.

A Northerner renowned for his shirts, Rich is a big Hip-Hop head, and loves travel, football in general (specifically MUFC), baseball, Marvel, and reading as many books as possible. Finding ways to combine all of these with ITAM & software licensing is always fun!

Connect with Rich on Twitter or LinkedIn.

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