Microsoft is discontinuing VMware licenses within Azure
As of October 31st, new AVS environments won't include the necessary VMware licenses. Existing customers have until August 2027 to transition.
Published on 20th August 2026
Microsoft will phase out the current licensing structure for Azure VMware Solution (AVS). This will eliminate one option for organisations to use VMware in the cloud without licensing VMware Cloud Foundation (VCF) themselves. Existing customers have until August 2027 to transition.
Under the current version of AVS, the necessary licenses for vSphere, vCenter, vSAN, NSX, and other components are included in the service Microsoft provides. That model is being phased out. Starting October 31, 2026, Microsoft will no longer sell new AVS environments that include these VMware licenses.
Going forward, customers must have their own VCF license from Broadcom, reports The Register. They can then use it within AVS via the “Bring Your Own License” model, also known as AVS VCF BYOL. Existing users of the current setup must transition by August 30, 2027, at the latest. After that, their existing environments will no longer run the same way.
Broadcom determines licensing model
The change stems from the policy Broadcom has been implementing since its acquisition of VMware. The company has heavily focused its portfolio on VMware Cloud Foundation. As a result, standalone VMware products and smaller bundles are playing an increasingly limited role.
This strategy also has implications for cloud providers. Broadcom no longer allows hyperscalers to offer VMware licenses as part of their cloud services. Customers must license VCF directly and then bring those licenses to a VMware environment hosted by a cloud provider.
Microsoft is not the first hyperscaler to adapt to this model. Broadcom announced the BYOL requirement late last year, and other major cloud providers have since adjusted their VMware offerings as well.
Another migration for VMware customers
Microsoft advises AVS users not to wait until 2027. Organisations should set aside time to purchase VCF licenses from Broadcom and to complete the technical transition to AVS VCF BYOL. Those who were already planning to modernise or move away from AVS are advised to draw up a migration plan now.
This change is part of a broader series of changes VMware customers have faced since Broadcom’s acquisition. Previous adjustments to partner and licensing models had already forced smaller cloud providers to discontinue VMware services. As a result, customers sometimes had to choose a new provider or virtualisation platform.
For Broadcom, the potential departure of smaller customers does not seem to be a reason to change course. The company is focusing VMware more explicitly on large organisations that use the full VCF stack. Broadcom points to growing VMware revenue and VCF adoption among large customers as proof that this strategy is yielding results.
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