Microsoft has announced a series of developments for Azure Local, the platform that lets you run native Azure services from your own datacenter, your partner's datacenter, or the edge.
Azure Local is the new name given to Azure Stack HCI (Hyper-Converged Infrastructure). It's arguably one of the best Hybrid Cloud platforms currently available on the market. At its core is the Windows Server-based Azure Stack HCI operating system running Hyper-V hypervisor and Storage Spaces Direct and Azure Arc which combined work together to turn any supported infrastructure cluster into your own, private Azure cloud.
While Azure Local does not support multi-tenancy and a lot of its features are aimed towards large enterprise customers requiring data sovereignty or compute at the edge, it is often overlooked by service providers who can take advantage of Azure Local to enhance the functionality of their services, especially considering the most recently announced updates to Azure Local.
Azure Local now enables you to run the core products of Microsoft’s collaboration suite Microsoft 365 out of your own datacenter on hardware owned and managed by you. At the time of writing, Microsoft 365 Local includes support for Exchange Server, SharePoint Server and Skype for Business Server.
This functionality allows you to convert two Azure Local clusters, running from separate racks, into local availability zones for fault tolerance and high availability. If one rack experiences a rack-level failure (e.g. a top-of-rack (ToR) switch failure or building power outage), the remaining rack continues to operate, maintaining data integrity and accessibility for all virtual machines (VMs) and containers that an outage that would take out.
As a preview feature, Azure Local can scale to 100+ nodes, allowing you to run Azure Local at scale. Microsoft currently offers multi-rack deployments in preview for qualified opportunities. While it appears that multi-rack deployments of Azure Local are delivered as several pre-integrated racks of hardware and you can think of it more like an Azure Stack Hub deployment than Azure Stack HCI, this still is a significant step up in terms of scale as previously, Azure Local was limited to a maximum of 16 nodes.
Microsoft has announced support for external Storage Arrays from most A-brand Storage vendors. This will enable Service providers, utilizing Storage Arrays to deliver block storage, to continue using those arrays and leverage that investment. This can be a very significant improvement considering that Storage Arrays and their networking components can make up close to 40% of the total hardware investment per cluster.
Microsoft has confirmed that support for additional storage protocols and capabilities will be coming soon.
Disconnected operations will allow you to run your Azure Local deployment without a connection to the Azure public cloud. Running Azure Local in a disconnected mode will require a control plane to be deployed locally and thus increase the requirements for hardware running it which is a minor price to be paid for those requiring fully isolated environments for compliance, data sovereignty or other reasons.
This feature is in preview at the time of writing and is expected to be Generally Available this year.
The joint announcement from Microsoft and Nvidia focused on delivering NVIDIA RTX PRO 6000 Blackwell Server Edition GPU, a high-end, data center-class accelerator with massive compute power and memory. When combined with Azure Local, it enables you to run the most demanding AI, high-performance computing (HPC), and advanced graphics workloads right in your own data center or at the edge on Azure Local.
As per Microsoft’s licensing terms, Microsoft itself is one of the listed providers to whom a number of licensing limitations apply. Since Azure Local uses Azure control plane and billing, it is considered an extension of Microsoft Azure and as such, all Listed Provider limitations apply to Azure Local.
What IS NOT allowed on Azure Local:
What IS allowed on Azure Local:
Based on the information available at the time of writing this, it appears that Microsoft 365 Local will only be available through Microsoft’s Customer Agreement (MCA).
Azure Local licensing metric is physical CPU cores of the node that it is running on.
The cost of the core functionality of Azure Local is currently set at a very reasonable $10 per physical CPU core per month making it very competitive against other on-premises virtualization solutions considering the functionality it brings and additional services it enables.
You can further improve the cost effectiveness by utilizing Azure Hybrid Benefit for Azure Local which allows you to bring your existing Windows Server Datacenter licenses with active Software Assurance to Azure Local and it waives the core functionality cost of the above mentioned $10 per physical core further driving down the cost.
Here are two examples of pricing that include both the Azure Local base functionality and unlimited number of Windows Server guest OS installations.
Example 1: Windows Server Datacenter CSP 3 year subscription licenses
| Windows Server* USD/ core/ month |
Azure Local USD/ core/ month |
Total for a 16-core node USD/ month |
| $14.00** ; | $0.00 | $224.00** |
* Windows Server 2025 Datacenter - 2 Core License Pack 3 Year - Annual
** price shown is an estimation, based on CSP price list.
Example 2: Pay As You Go (PAYG) licenses with Windows Server add-on.
| Windows Server* USD/ core/ month |
Azure Local USD/ core/ month |
Total for a 16-core node USD/ month |
| $23.30** | $0.00** | $528.48** |
* Windows Server subscription add-on (for guests)
** price shown is based on public list price, West US region
For single tenant environments, Azure Local is one of the best Hybrid Cloud platforms available, giving you Hyperscale Cloud functionality while retaining Data Locality and enabling full control over the underlying hardware. Licensing it via CSP subscriptions makes it a very cost effective alternative to other on-premises virtualization solutions currently available on the market.
To find out more about Azure Local, licensing related to it and the ways that you can save on Azure Local, its connected services and other Microsoft products, reach out to your local SoftwareOne representative.
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We're Microsoft experts. Tell us about what you want from Azure Local and we'll get right back to you.
