Broadcom's VMware pricing changes have made Azure migration economically compelling for many enterprise environments. But the licensing decisions around Azure VMware Solution versus native Azure — and how to negotiate your MACC and Azure Hybrid Benefit — determine whether the migration delivers its full financial potential.
When an enterprise decides to migrate VMware workloads to Azure, it faces a fundamental choice: use Azure VMware Solution (AVS) — which runs VMware software natively within Azure's infrastructure, maintaining operational familiarity — or migrate workloads to native Azure IaaS (Azure Virtual Machines, Azure Kubernetes Service, and Azure PaaS services), eliminating the VMware layer entirely. The licensing implications, costs, and risk profiles of these two paths differ significantly, and many organisations use a combination of both based on workload characteristics.
Understanding this choice in the context of the Broadcom licensing changes is essential. The goal is not simply to move to Azure — it is to achieve a better total cost position than staying on Broadcom VCF, with acceptable risk and migration complexity. Both AVS and native Azure can achieve this, but through different mechanisms and over different timescales. For broader migration context, see our VMware alternatives comparison.
Azure VMware Solution provides the fastest path to Azure with minimal operational change — VMs migrate with near-identical management experience. But AVS is expensive relative to native Azure IaaS for comparable compute capacity. Use AVS for workloads requiring rapid migration and maintaining VMware operational tooling; target native Azure rehosting for workloads with a longer migration timeline and higher cost optimisation priority.
Azure VMware Solution is a Microsoft Azure service that provides dedicated VMware vSphere infrastructure within Azure datacentres, managed by Microsoft and integrated with Azure's networking, identity, and management services. AVS runs genuine VMware software — vSphere, vSAN, NSX-T — on dedicated bare metal nodes within Azure, and is licenced and supported by both Microsoft and VMware (Broadcom). This means organisations running AVS are not eliminating their Broadcom relationship — they are moving the operational location of their VMware environment to Azure while Microsoft handles the underlying hardware management.
AVS is priced per dedicated node, with node types ranging from the AV36 (36 cores, 576GB RAM, 15.2TB storage) to the AV64 (64 cores, 1TB RAM). The per-node hourly pricing translates to annual node costs in the range of £90,000–£160,000 per node depending on region, commitment term, and discounts. A typical enterprise AVS cluster of 3 nodes (minimum cluster size) costs £270,000–£480,000 per year before Reserved Instance discounts or Azure Hybrid Benefit.
The key financial benefit of AVS for organisations with existing Windows Server and SQL Server licences is Azure Hybrid Benefit eligibility — Windows Server and SQL Server licences can be applied to AVS guest VMs, avoiding additional licence charges for the OS and database layer within the AVS environment. This can represent significant savings for Windows-dominant VMware environments. Our detailed Azure Hybrid Benefit guide covers the AVS application of AHB comprehensively.
| Node Type | Cores | RAM | Storage | Approx. Annual Cost (Pay-As-You-Go) | With 3-Year Reserved |
|---|---|---|---|---|---|
| AV36 | 36 vCores | 576 GB | 15.2 TB vSAN | ~£130,000/node | ~£90,000/node |
| AV36P | 36 vCores | 768 GB | 19.2 TB vSAN | ~£145,000/node | ~£100,000/node |
| AV52 | 52 vCores | 1.4 TB | 38.4 TB vSAN | ~£175,000/node | ~£120,000/node |
| AV64 | 64 vCores | 1 TB | Custom | ~£160,000/node | ~£110,000/node |
Indicative UK South pricing. Actual pricing varies by Azure region and current Microsoft commercial offers. 3-year reserved instance pricing reflects typical enterprise discounts.
AVS is significantly more expensive per compute unit than native Azure IaaS. A 3-node minimum AVS cluster providing approximately 108 vCores costs £270,000–£390,000 per year (with reserved pricing). Equivalent Azure compute capacity on native IaaS would cost £60,000–£120,000 per year. The AVS premium reflects the inclusion of vSAN storage, NSX networking, and the operational convenience of maintaining a VMware environment — but this premium must be justified by workload requirements.
Native Azure migration — using Azure Migrate to assess and rehost VMware VMs as Azure Virtual Machines — eliminates the VMware licensing layer entirely. Each VMware VM is assessed for compatibility with Azure VM sizes, and migration is executed using Azure Migrate's agentless replication capability, which does not require software installation in the guest VM. The result is an Azure VM running the same OS and application stack, without vSphere, vSAN, or NSX.
The cost advantage of native Azure over AVS is substantial for most workload profiles. Azure D-series VMs (general purpose) and E-series VMs (memory optimised) provide the compute density relevant for virtualisation workload migration, at pay-as-you-go prices of £0.10–£0.80/hour for common sizes. With 3-year Reserved Instances and Azure Hybrid Benefit for Windows guests, the effective cost reduces further — a D32s_v5 (32 vCores, 128GB RAM) with 3-year reserved pricing and AHB for Windows runs at approximately £15,000–20,000 per year, versus the equivalent capacity on AVS at £45,000+ per year.
The trade-off is migration complexity and operational change. Native Azure VMs are managed through Azure's tooling (Azure Portal, Azure Monitor, Azure Policy) rather than vCenter and the VMware toolchain. Teams accustomed to vSphere administration require retraining. Applications with VMware Tools dependencies, VMware-specific storage policies, or NSX-T network configurations require additional preparation. For the operational change to be successful, the migration must be accompanied by an appropriate skills investment and a realistic timeline that accounts for workload-specific testing requirements.
| Factor | Azure VMware Solution (AVS) | Native Azure IaaS |
|---|---|---|
| Migration speed | Fast — minimal VM change | Moderate — assessment and testing required |
| Operational change | Minimal — VMware tooling retained | Significant — Azure tools replace VMware |
| Compute cost | High (£90k–£160k/node/yr) | Low (£10k–£25k/VM equiv/yr) |
| Storage cost | Included in node (vSAN) | Separate (Azure Managed Disks) |
| Networking | NSX retained, Azure connectivity | Azure VNet (different model) |
| AHB applicability | Windows/SQL AHB for guests | Full AHB on all Azure VMs |
| Broadcom dependency | Continues (via Microsoft) | Eliminated |
| Long-term cost trajectory | AVS pricing reflects VMware licensing | Independent of VMware pricing changes |
| Best for | Rapid exit from on-premises, short-term | Cost optimisation, long-term cloud strategy |
Azure Hybrid Benefit (AHB) is one of the most significant financial optimisation opportunities in a VMware to Azure migration. It allows organisations to apply existing on-premises Windows Server and SQL Server licences to Azure VMs at a substantially reduced rate, effectively eliminating the OS and database licence cost for VMs running in Azure. For organisations migrating VMware workloads that run Windows Server and SQL Server — which describes the majority of enterprise VMware estates — AHB is not optional: it is a fundamental component of the migration cost model.
Key AHB entitlements for VMware migrations include:
Our full Azure Hybrid Benefit guide provides the complete calculation methodology and eligibility rules. For VMware to Azure migrations, the AHB analysis should be completed before finalising the Azure migration cost model — it often changes the economics materially, particularly for SQL Server-heavy environments.
A Microsoft Azure Consumption Commitment (MACC) is a pre-committed spending agreement that qualifies for Azure marketplace and service consumption. For organisations planning VMware to Azure migrations, the MACC negotiation creates a dual opportunity: it funds the Azure consumption required for the migration (including AVS nodes, Azure VMs, storage, and networking) while simultaneously creating significant leverage to negotiate the MACC terms themselves.
Microsoft's commercial teams are motivated to close MACC agreements that bring VMware workloads to Azure, because this represents incremental Azure consumption revenue that has a direct competitive displacement benefit for Microsoft (reducing Broadcom/VMware revenue). This motivation provides real negotiation leverage. Organisations with credible VMware migration plans — supported by Azure Migrate assessments and documented VMware cost exposure — can use this to negotiate:
The negotiation sequencing matters: establish your MACC spend commitment before locking in reserved instance pricing, and use the combined MACC + RI commitment as the basis for requesting additional discounts. Our Azure committed spend negotiation guide provides detailed MACC negotiation tactics applicable to VMware migration scenarios.
Microsoft's fiscal year ends June 30. VMware migrations involving significant MACC commitments should target Q3 (April–June) negotiations when Microsoft field teams have the most motivation to close large enterprise deals. Migrations completing in Q4 (October–December) also benefit from fiscal quarter-end pressure. Avoid January–February negotiations if possible — these are Microsoft's weakest commercial period for incentive offers.
Microsoft has structured several programmes to incentivise VMware-to-Azure migration, reflecting the strategic importance of capturing VMware workloads displaced by Broadcom's pricing changes. These programmes evolve, but in 2026 the primary available incentives are:
Azure Migration and Modernisation Program (AMMP): Microsoft's primary migration incentive programme provides funding for Azure Migrate assessments and partner-delivered migration projects. Funding levels depend on the scale of the migration and the Azure consumption committed. Large enterprise migrations (500+ VMs) can access £50,000–£200,000 in funding support.
Azure VMware Solution Migration Credits: Microsoft has offered specific credits for organisations committing to AVS deployments as a VMware migration path, typically structured as a percentage of the first-year AVS node commitment applied as Azure credits. These credits are not always publicly advertised and are negotiated during the commercial discussion with your Microsoft account team.
Azure Hybrid Benefit Extension: For perpetual Windows Server and SQL Server licences without active Software Assurance, Microsoft has offered AHB eligibility extension programmes for organisations committing to Azure migration — effectively allowing AHB use without requiring SA renewal, if the migration is executed within a defined timeframe. Confirm SA status and AHB eligibility early in the migration planning process.
The most commercially sophisticated approach to a VMware to Azure migration is to run it in parallel with a Broadcom VCF renewal negotiation — using the Azure migration plan as the primary leverage mechanism for Broadcom price concessions, while simultaneously building genuine migration momentum in case Broadcom's commercial terms do not justify staying.
This dual-track approach works because it creates a no-lose outcome: either Broadcom responds to the migration threat with materially better commercial terms (in which case the migration plan becomes a medium-term platform evolution rather than an emergency exit), or Broadcom does not respond adequately and the migration proceeds on the planned timeline (in which case the financial model has already demonstrated the migration is commercially justified). Organisations that execute this dual-track approach consistently achieve better outcomes than those that pursue either migration or negotiation in isolation.
The key elements of a credible dual-track strategy are: a documented Azure Migrate assessment (providing technical credibility), a funded MACC agreement with Microsoft (providing commercial commitment), a realistic migration timeline that aligns with the VCF renewal date, and specialist advisory support that can manage both the Microsoft commercial negotiation and the Broadcom engagement concurrently. For the top firms providing this dual-track support, see our VMware negotiation firm rankings.
Our advisors model the full financial comparison, negotiate your MACC and AHB terms, and run the dual-track Broadcom strategy to maximise your commercial outcome.