Is Azure Stack DOA?

Many of us were waiting patiently for pricing information on Azure Stack. We had already heard that it would be CSP, makes sense, and we had been told it would cost anywhere from 0-100% of the cost of running in Azure. So now, we know the pricing.

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Comparing Azure Stack with Azure

In order to make the comparison the most fair, here are the prices for A series VM in Azure

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Since A0 at least historically did not have a full core, let us compare an A1 with Azure Stack.

The cost for an Azure Stack including Windows license is $34, a VM in Azure is $29.76. We have to pay MORE to run a VM in Azure Stack, than in Azure! If we wanted to run an A8 on Azure Stack, it would cost us $272, which is around half of what it costs in Azure.

Comparing Azure Stack with SPLA (System Center and Hyper-V)

For me it’s so much a choice between Azure Stack or Azure. Since the costs are nearly the same (I have to buy Azure Stack Certified Hardware, electricity and cooling), I would always recommend Azure if the customer is ready for that. The real choice is between Azure Stack and a traditional setup with Hyper-V, VMM, SCCM etc.

If we look past the fact that I can probably get the hardware platform a lot cheaper if it’s not Azure Stack certified, the real question is licensing cost. If I want to continue using my SPLA, I can choose to use the base virtual machine for $6 per month. Even a small hosting provider in small Denmark has around 2000 vCPUs, so if I want to move to Azure Stack I have to pay $12.000 for Azure Stack alone, per month. When I make business cases, I do them for 60 months at a time, so that is $720.000 for that period, in Azure Stack licenses alone.

However, what’s the point of using Azure Stack with SPLA, the real benefit would be running all licenses through CSP, then we won’t have to use all that time securing license compliance, and it would all be automatically. What a dream.

Today we license our infrastructure with SPLA, and for all OS and System Center, we use CIS, which allows us to run an unlimited amount of VM’s and System Center Products as long as the underlying hypervisor has its CPU cores licensed with this CIS license. I don’t know if these CIS license prices are public knowledge, but let’s say they are $20 per core, per month (they are cheaper than that). If we run with a 1-1 over commitment on CPU to vCPU, I will need 2000 CIS licenses to run the aforementioned 2000 vCPUs, that’s $40.000 per month in licenses.

To run the same 2000 vCPUs in Azure Stack and buying the OS licenses through CSP, I would have to pay $34 per core, per month, $68.000 in total per month. If I subtract the Azure Stack license ($6), it’s still $56.000.

Conclusion

Microsoft has what seems to be a cool product with Azure Stack, but they priced it excessively high for a hosting provider, to be able to provide a competitive price for their customers. It’s OMS all over again.

I have a theory that Microsoft will retire SPLA, and make us all use CSP. Therefore, this is just another way to make hosting Microsoft products more expensive so the gap to Azure is minimized, that way they can push more customers in the direction, where they have all the control and make all the money. It makes total sense for Microsoft to do this, but us, as partners need to be on our toes if we want to continue to have a business.

Some CTO’s out there might have success with convincing their CEO/CFO that Azure Stack is a good idea, but I honestly don’t see the business case.

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