Microsoft has begun to preview of Azure Dedicated Host, which will offer customers a physical server hosted on the Azure cloud, which is not shared with other customers.

The idea is that the Azure Dedicated Hosts will provide customers with improved visibility and control to help them address corporate compliance and regulatory requirements.

At the same time Microsoft also changed its on-premises software licensing rules, to make its enterprise software offerings cheaper to run on its Azure dedicated servers. But at the same time, the change will make it more expensive to run Microsoft enterprise software on the clouds of rival service providers, such as AWS.

Microsoft Azure
– Sebastian Moss

Read the fine print

“The emergence of dedicated hosted cloud services has blurred the line between traditional outsourcing and cloud services and has led to the use of on-premises licenses on cloud services,” said Microsoft.

“Dedicated hosted cloud services by major public cloud providers typically offer global elastic scale, on-demand provisioning and a pay-as-you-go model, similar to multitenant cloud services.

“As a result, we’re updating the outsourcing terms for Microsoft on-premises licenses to clarify the distinction between on-premises/traditional outsourcing and cloud services and create more consistent licensing terms across multitenant and dedicated hosted cloud services,” it said.

From 1 October, on-premises licenses purchased without Software Assurance and mobility rights cannot be deployed with dedicated hosted cloud services offered by the following public cloud providers: Microsoft, Alibaba, Amazon (including VMware Cloud on AWS), and Google.

“They will be referred to as 'Listed Providers',” said Microsoft. “These changes don't apply to other providers and there will be no change to the Services Provider License Agreement (SPLA) program or to the License Mobility for Software Assurance benefit, other than to expand this benefit to cover dedicated hosted cloud services.”

Essentially what this means is that while Microsoft has positioned this change as a simple update of its licensing scheme to reflect a changing market - it does give a clear cost advantage to running Microsoft software on Azure.

According to The Register, many software deployments that are currently allowed will no longer be permitted on dedicated cloud services from the listed providers.

It reports that Microsoft is making it harder - or in some cases impossible - to bring your own licenses, forcing customers either to rent the software via SPLA, or to purchase licences with software assurance, an annual service charge.

"Yet another bait and switch by Microsoft, eliminating license benefits to force MS use," Werner Vogels, AWS CTO, tweeted (lightly edited for clarity).

"First, MS took away BYOL SQL Server on RDS, now no Windows upgrades w/BYOL on AWS. Hard to trust a company who raises prices, eliminates benefits, and restricts freedom of choice."