What changed
Microsoft confirmed the Azure VMware Solution (AVS) license-included service will retire on August 30, 2027. The decision follows Broadcom’s VMware Cloud Foundation (VCF) licensing policy changes, which now require customers to bring their own portable licenses across all hyperscaler platforms. For AVS customers on license-included SKUs, this means a mandatory transition to bring-your-own-license (BYOL) or an exit from AVS entirely.
The retirement affects two tiers differently. Pay-as-you-go (PayGo) SKUs retire on October 15, 2026, giving those customers roughly two months to plan. Reserved Instance (RI) customers have until August 2027, but Microsoft stresses that license procurement from Broadcom and migration planning take significant lead time.
Key dates
- October 15, 2026 – AVS license-included PayGo SKUs retire
- August 30, 2027 – All remaining AVS license-included services end; AV36 SKU retirement
- August 31, 2027 – Service disruption begins for customers who took no action
Why this is happening
Broadcom’s acquisition of VMware triggered a fundamental shift in how VMware licenses work across cloud platforms. In November 2025, Broadcom changed its licensing policies to require portable bring-your-own licenses for VMware Cloud Foundation on all hyperscalers, not just Azure. This removed the economics that made the license-included AVS model viable. Microsoft cannot bundle VCF licenses into the AVS service cost without Broadcom’s cooperation, and that cooperation has ended.
What AVS customers need to do
Customers currently using license-included Reserved Instance SKUs have three options:
- Purchase portable Broadcom VCF licenses and transition to an AVS VCF BYOL SKU. This is the path Microsoft recommends for customers who want to stay on AVS. Factor in procurement lead time, which can stretch weeks or months depending on your Broadcom relationship.
- Exit AVS before August 30, 2027. Alternatives include migrating VMs to native Azure infrastructure (Azure VMs, Azure VMware Solution BYOL, or re-platforming), or moving to another VMware Cloud provider.
- Do nothing and accept disruption – not recommended. After August 30, 2027, license-included services stop. Workloads running on those SKUs will lose their hosting platform.
For RI customers, Microsoft will allow reservation exchanges for those with expiration dates beyond August 30, 2027. Contact your Microsoft account team to initiate the exchange.
PayGo customers face the tighter deadline
The October 15, 2026 PayGo SKU retirement is the more immediate concern. PayGo customers cannot wait until 2027. If you are running AVS workloads on PayGo license-included SKUs, you have two months to either move to BYOL or migrate off AVS. Microsoft has not indicated any grace period beyond October 15.
Planning considerations
The transition is not just a licensing change. Moving from license-included to BYOL requires:
- License sizing – VCF licenses are purchased per-core. You need to understand your current AVS consumption in core terms, not just node counts.
- Procurement timeline – If your organization does not have an existing Broadcom relationship, establishing one and purchasing VCF licenses can take 4-8 weeks.
- SKU migration – Transitioning from license-included to BYOL SKUs involves a support request. Plan for downtime windows.
- Cost comparison – BYOL AVS pricing is lower per-node since it excludes the VMware license cost, but you now carry the VCF license cost separately. Run the numbers for your specific workload profile.
What this means for the broader VMware-on-cloud market
Broadcom’s licensing changes affect all hyperscalers, not just Azure. AWS VMware Cloud on AWS and Google Cloud VMware Engine face the same BYOL requirement. The era of bundled VMware licensing in cloud services is ending. For organizations running VMware workloads in multiple clouds, portable VCF licenses are now the standard model. This is actually an opportunity to consolidate license management and potentially reduce total spend, but only if you plan the transition deliberately.
Comparing the two paths: BYOL vs exit
Staying on AVS with BYOL licenses preserves your existing VMware operational model. Your admins keep using vCenter, your VMs keep running the same way, and your networking and storage configurations carry over. The trade-off is the VCF license cost, which you now pay Broadcom directly. For organizations with deep VMware expertise and complex VM estates, this is usually the lower-risk path.
Exiting AVS is harder short-term but can reduce long-term lock-in. Re-platforming VMware VMs onto native Azure VMs eliminates the VCF license cost entirely but requires re-engineering HA, DRS, and storage policies. Tools like Azure Migrate can lift-and-shift VMs, but the operational model changes. Organizations that were already planning a cloud-native migration can use this retirement as the trigger.
The third option, moving to a different VMware Cloud provider, does not solve the Broadcom licensing problem. All hyperscaler VMware offerings now require BYOL. You would move your AVS workloads to AWS or Google Cloud and still need VCF licenses. Only choose this path if you have a strong multi-cloud strategy already in place.
Bottom line
The AVS license-included retirement is a consequence of Broadcom’s strategy, not a Microsoft product decision. But the impact on AVS customers is real. PayGo customers need to act now. RI customers have more runway but should not delay. Start the assessment, engage your Microsoft account team, and begin the Broadcom licensing conversation this week if you have not already. Waiting until 2027 to plan a 2027 migration is how production outages happen.