New Microsoft Azure Hybrid Cloud Benefit for Windows Server eases transitions to the cloud


Everyone Needs to know this.   All those Windows Servers you have been selling to customers via volume licensing can move to Azure without incurring the runtime charges for the OS if the customer has Software Assurance.  This is HUGE.   Generally Microsoft has vehicles for larger customers to protect their existing investment when transitioning to the cloud, but these benefits do not always extend to the small or midmarket business that buys from a reseller or channel partner.

The Microsoft Azure Hybrid Cloud Benefit for Windows Server became generally available this month (Mid February) and I have already taken calls from resellers to clarify some of the details.  I thought I would share them with you below.

From the landing page on the Azure website, the Microsoft Azure Hybrid Cloud Benefit for Windows Server  allows one to “Benefit from your existing Windows Server license and move to the cloud for less”

The Azure Hybrid Use Benefit lets those using Windows Server with Software Assurance bring their on-premises licenses to Azure. Rather than paying the full price for new Windows Server virtual machines in Azure, you only pay for the base compute rate*. For each Windows Server 2 processor license with Software Assurance, customers may run two virtual machines with up to 8 cores each, or one virtual machine with up to 16 cores, at the lower price.

An illustration graphically depicts the savings and it is substantial!



I would encourage everyone to read the detailed FAQ that is mentioned on the site as well.   It provides answers to all the common questions one might ask. It breaks it down quite well, but the real meat is the discount and I want to share a few more examples and further clarify.   The FAQ states the rate used to compute the cost is the “base compute rate” which is commensurate with the “Linux” rate.   This can be gathered by looking at the cost breakdown here.  If you attempt to secure pricing elsewhere you might be faced with a dropdown that includes SUSE Linux and Red Hat Enterprise Linux.  If only given those choices, choose SUSE as it is correct.  The pricing consistent with the Hybrid Cloud Benefit is “Linux” pricing:


As an example let us explore the relative costs of a default D1 virtual machine running Windows Server in Azure versus the Linux or Hybrid Cloud Benefit price.


A D1 Virtual Machine running Windows is priced at $104 a month.  That same virtual machine leveraging the Microsoft Azure Hybrid Cloud Benefit for Windows Server would be the Linux price of $57 a month below.


That represents a savings of roughly 45%!

Now, how do I do this on the Technical side?

It is very important to understand the way you go about accomplishing this technically.  The process is straightforward, but not necessarily simple depending on your level of expertise and familiarity with PowerShell and VM images work in Azure.   you do NOT select a Linux VM from the gallery and you do not select a Windows Server image from the gallery.  The FAQ explains:

The Azure Hybrid Use Benefit is applied by creating a Windows virtual machine through PowerShell and setting the new licenseType property for each virtual machine. Windows virtual machines with the new property are billed at the base compute rate, with a specific notation in the bill that the benefit has been applied. Gallery images cannot be used with this benefit.

So those of you that have never cracked the book on PowerShell, now might be the time to start! ;-)

The LicenseType property cannot be updated once a machine is created so no existing virtual machines can be “converted” by changing this property.  That said one could certainly still use the VHD file and associate it with the newly created virtual machine also using PowerShell.

For those that need a primer on creating virtual machines in Azure using PowerShell there are numerous resources.  Guidance on how to do so using the newer (and recommended) Resource Manager Model can be found here.

In addition to the virtual machine creation guidance above you will need to add the LicenseType Property of  “Windows_Server”

The graphic below explains the LicenseType  property.


Actual syntax to stipulate the licenseType property is within the MSDN article close to the bottom.  It reads:

"properties": { "licenseType": "Windows_Server", "availabilitySet": { "id":"/subscriptions/{subscription-id}/resourceGroups/myresourcegroup1/providers/Microsoft.Compute/availabilitySets/myav1" }, ...

I hope this information is helpful to you and can make a difference in accelerating your customers to Azure.   I love it when we make something less expensive and I love it when we add additional value to our products like  Software Assurance in this case!

Happy Leap Day!


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Woody Walton

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