**Azure VMware Solution Faces VCF Licensing Shift Towards October 2026**
Microsoft has announced significant licensing changes for its Azure VMware Solution (AVS) that will impact how customers deploy and manage VMware environments on Azure. The changes, which include an eventual move to a bring-your-own-licence (BYOL) model and restrictions on new node purchases, come into full effect in late 2025 and 2026.
### The Shift to Bring-Your-Own-Licencing (BYOL)
A key transformation is the transition away from a bundled licensing model. Currently, many AVS customers benefit from VMware Cloud Foundation (VCF) subscriptions included in their deployment costs. This arrangement is coming to an end. As of October 31, 2026, Microsoft states that deployments using the old bundled model will no longer comply with Broadcom’s licensing requirements. To remain operational, these customers must provide their own VCF subscription, effectively moving to a BYOL structure.
This change is already underway. Microsoft ceased selling new AVS nodes that included a VCF subscription after October 15, 2025. New nodes now require customers to purchase a portable VCF subscription directly from Broadcom.
### Exceptions and Transition Periods
Not all customers are affected immediately. Those with active reserved instances for VCF-included hosts are granted a reprieve. These deployments can continue using the bundled VCF subscription until the reserved-instance term expires. However, once that term ends, the BYOL model becomes mandatory. Furthermore, any usage that exceeds the capacity covered by an existing reservation will require a separate BYOL subscription.
For organisations moving to the BYOL model, the process involves purchasing the VCF software subscription from Broadcom and the AVS infrastructure from Microsoft separately. While Microsoft suggests this BYOL option is priced lower than the bundled alternative, this comparison does not factor in the separate cost of the VCF subscription from Broadcom.
### Managing Licensing in a Hybrid Environment
The new flexibility allows customers to register their Broadcom subscriptions with AVS via the Azure portal. This supports mixed-licensing environments, where some hosts continue under existing commitments while new capacity uses customer-owned subscriptions.
The portability feature also enables eligible VCF subscriptions to move between an organisation’s on-premises data centre and Azure VMware Solution. This is part of a broader move by Broadcom to allow subscription portability across hybrid environments. It is important to note, however, that ported licences are currently restricted to public cloud services on Broadcom’s Certified Cloud Services list.
Customers must also manage core entitlement carefully. The total number of registered VCF cores deployed in an Azure VMware Solution environment must not exceed the number purchased from Broadcom. Although a single VCF key can be divided across multiple private clouds, exceeding the core limit can result in non-compliance and even service suspension.
### Migration Planning Beyond AVS
For organisations considering a move away from AVS, Microsoft offers migration tools. Azure Migrate can assess VMware workloads for migration to either AVS or direct deployment on Azure virtual machines. These assessments can provide estimates on workload readiness, required node count, resource utilisation, and cost projections. The platform also supports migrating virtual machines from AVS to other Azure services, including an analysis of server dependencies before groups of workloads are moved.
### A Wider Industry Shift
The changes in Azure are part of a larger restructuring of VMware’s licensing and deployment options under Broadcom. This shift affects other major cloud providers as well. For example, Google Cloud adjusted its VMware Engine policy, requiring new customers after October 15, 2025, to use Broadcom’s BYOL model. This was accompanied by adjustments to capacity controls and quota limits for new commitments.
These moves follow Broadcom’s overhaul of the VMware portfolio, which includes the end of perpetual licences and a move towards subscription-based models with a focus on hybrid cloud portability. The company has also streamlined its product offerings, consolidating over 160 products into a smaller suite centered on VMware Cloud Foundation and vSphere Foundation.
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### FAQ
**What is changing with Azure VMware Solution licensing?**
Microsoft is moving its Azure VMware Solution from a model with bundled VMware Cloud Foundation (VCF) subscriptions to a bring-your-own-licence (BYOL) model. New nodes purchased after October 15, 2025 require a separate VCF subscription from Broadcom. Existing bundled subscriptions must transition to BYOL by October 31, 2026.
**What happens to my existing reserved instances?**
Customers with active reserved instances for VCF-included hosts can continue using the bundled subscription until their reservation term ends. After the term expires, they must switch to a BYOL model.
**What is the BYOL model?**
Under BYOL, customers purchase the VCF software subscription from Broadcom and the AVS infrastructure from Microsoft separately. This option is marketed as lower cost than the bundled model, but it does not include the price of the VCF subscription.
**Can I move my VCF licence between environments?**
Yes, portable licensing allows customers to move their eligible VCF subscriptions between their own data centres and Azure VMware Solution. This supports hybrid cloud strategies.
**What if my AVS environment uses more cores than I purchased?**
Your total registered cores must not exceed your Broadcom entitlement. If an AVS private cloud exceeds its core entitlement, it can become non-compliant and be at risk of service suspension.
**Is this change affecting other cloud providers?**
Yes. Similar to Microsoft, Google Cloud now requires new VMware Engine commitments to use Broadcom’s BYOL model and has adjusted capacity controls for new purchases.
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### Conclusion
Microsoft’s licensing changes for Azure VMware Solution mark a significant shift for organisations using VMware on Azure. The move to a BYOL model and the end of bundled subscriptions require careful planning for compliance and cost management. While the transition offers flexibility for hybrid cloud deployments, it also places more responsibility on the customer for managing software entitlements and core allocation. Those affected should review their current agreements and engage with both Microsoft and Broadcom to ensure a smooth transition before the October 2026 deadline.
