Microsoft is changing how Azure VMware solutions (AVS) work because Broadcom has updated its VMware licensing. The company is shifting from bundled licensing to a new approach.
The new bring-your-own license (BYOL) model may make buying licenses more complicated, but it lets you use your existing licenses. This change is meant to make it easier to adopt hybrid computing solutions.
Here are the main changes and what they mean for IT teams.
The New Rules: What Will Change After October 15, 2025
End of Bundled Licensing: Starting Oct 15, 2025, Microsoft will no longer sell AVS nodes that include VMware, Cloud Foundation, Open (VCF), subscriptions.
Mandatory BYOL: Anyone buying the new AVS nodes will need to bring their own portable VCF subscriptions, which must be purchased directly from Broadcom or its partners.
Support Timeline: Current AVS customers with VCF included can continue using their setup without any licensing changes until October 31, 2026.
Protection for existing users: If you buy reserved instances (RIs) by October 15, 2025, you can keep your current bundled licensing as long as your term lasts.
What does this mean for IT Teams?
- Heightened Operational complexity (short-term). IT teams will no longer receive a single invoice from Microsoft for both cloud infrastructure and VMware licensing. Now they will need to manage, track, and renew VCF licenses separately through Broadcom, which could add more administrative work.
- Flexibility in moving from CAPEX to OPEX: The new model makes it easier to move licenses between local systems and Azure VMware solutions, supporting hybrid strategies. However, IT teams will need to manage license compliance across different environments diligently.
- Possible cost savings for current license holders: If your organization already has portable VCF licenses, using the BYOL option in AVS could save you money. In general, the AVS VCF BYOL option costs less than the old bundled license included version.
- Faster move toward modernization: With managing licenses now more complex and a 2026 deadline, organizations may need to rethink their reliance on VMware. This could speed up moves to native Azure services (IaaS/PaaS) to avoid depending on Broadcom’s licensing in the future.
- Managed service experience continues even with the licensing changes. AVS is still a fully managed service. Microsoft will keep handling the infrastructure patching and upgrades, so IT staff do not have to worry about hardware maintenance.
Recommended Steps For IT Departments.
- Audit licenses now: Check your current on-premises VMware licenses to see if they can be used elsewhere.
- Review Reserved Instances: Decide whether to secure the current bundled VCF by purchasing one- to three-year reserved instances before October 15, 2025.
- Engage procurement: start talking with Broadcom or their authorized partners to learn about the new process for getting portable VCF subscriptions.
- Plan for 2026: Ensure all your workloads are ready to switch to BYOL by October 31, 2026.
Broadcom has updated its VMware licensing policies, affecting Microsoft partners and customers using Azure VMware Solution.
With these changes, customers must bring their own portable VCF subscriptions when using any hyperscaler platform. This means they must buy VCF subscriptions directly from Broadcom through the Broadcom partner ecosystem or use. To use with hyperscaler cloud services. Although this affects how customers can buy new VCF licenses, it does not affect the availability of AVS services.
Azure VMware Solution (AVS) already supports Broadcom’s model through the AVS VCF BYOL option, which lets customers use AVS with their own VCF subscriptions. As you are there, the preferred option for running VMware and mine is the AVS VCF BYOL option, which also costs less than AVS with VCF subscriptions included.
This update is only about licensing and does not change the Azure VMware Solution cloud service itself. Microsoft will continue to offer AVS as a fully managed VCF private cloud service on Azure, handling infrastructure and VMware host management, including patching and upgrades. This allows IT staff to focus on higher-value work, such as modernizing workloads and launching new AI projects.
