DISCLAIMER: THIS IS NOT A LEGAL DOCUMENT FOR MICROSOFT LICENSING. CONTACT YOUR LICENSING SPECIALIST OR RESELLER OR MICROSOFT DIRECTLY.
Since 2012, Microsoft has sold Enterprise SQL Server licenses per core, 4 core minimum (The old processors became 4 cores per processor equivalent) and Standard edition SQL Server licenses either per-core, or per-server with CALs (Client access licenses). No client access licenses are required if your server runs on the per-core licensing model. Windows Datacenter was sold in processors, but as of 2016 is sold by the core, 8 cores per old processor.
If you wanted to use virtualization (on-premises or cloud), and also get updated software, and cold disaster recovery benefits, you needed software assurance on your cores. (or standard servers, but that doesn’t matter for the next part).
If you covered all physical cores in your environment with both Windows Datacenter and SQL Server Enterprise licenses, you could spin up as many VMs as you would like, until the hardware got overloaded. This is where fast processors and lots of RAM could benefit you. This is called “Unlimited Virtualization”
Microsoft sold licensing on-premises through Enterprise Agreements or through resellers. Big enterprises in virtual environments (VMWare etc) had to maintain software assurance. This is a good deal so far. This vehicle for purchasing licenses allows for greater discounts with volume, as well as 3 year payment plans on enterprise agreements. More recently, there are available subscription licenses as well, for shorter-term usage.
In general, in Azure, if you are running virtual machines or databases full blast for three years straight, purchasing the licenses and software assurance will be cheaper than paying per-minute billing for Windows and SQL Server.
For Azure Hybrid Use Benefits… You can BRING your on-premises Windows and SQL cores to Azure. We give a little grace period, but basically shut down those 8 cores on-prem, and bring them to Azure… either in a VM with 8 cores, or now, Azure SQL Managed Instance with 8 cores, or Azure SQL Database with the vCore model. Again, core licenses of SQL Server and Windows have to be purchased separately from Azure.
If you started with an Azure VM deployed with a pay-per-minute billing model, you can change it to BYOL (Bring your own license).
If you are purchasing Azure through a Cloud Solutions Provider (CSP): Think of the CSP as the Azure delivery mechanism (they can sell Dynamics and Office 365 as well), and licensed cores of SQL Server or Windows can land on top of the infrastructure you spin up there. If the CSP is also a license reseller, then they can sell you those cores of Windows and SQL Server.
Here is a scenario. Let’s say you leverage a CSP who sells Azure. You wish to build a solution which is then deployed and sold to your customers. They wish to have you sell them the Azure. The end customer goes into the azure subscription, and picks a vm, and says “YEAH I HAVE MY OWN CORES AND Software assurance”. The CSP has to ALSO become a reseller for SQL Server and Windows licenses, or you, the end customer, has to purchase those SQL and Windows licenses through a reseller.
If you deploy your own virtual machines onto Azure, there is no Azure-based tracking of licenses. You will need to ensure you have inventory of appropriate licenses to be compliant for those purposes. Software asset management has many paths to help you. Here is a tool that can scan your on-premises and Azure environment for this information.
I hope this helps clear up some confusion around Azure and Windows and SQL Server licensing!
George Walters 