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Microsoft Azure Stack HCI – Industry Snapshot

Published September 15th, 2020. In this free Industry Snapshot, Eric Slack discusses recent changes to Microsoft Azure Stack HCI including new features and subscription-based software solution. Download now!

Azure Stack HCI is now an Azure Hybrid Cloud Service

Microsoft has made some changes to the Azure Stack HCI product, adding new features, making it a subscription-based software solution and more closely integrating it with the Azure cloud.

The new Azure Stack HCI is designed to be the on-premises portion of a hybrid cloud, fully integrated with Azure portal and billed like other Azure services. No longer part of Windows Server, this HCI product has its own operating system that is designed to run VMs, although it can also run MS SQL Server natively. Introduced at Microsoft Ignite 2020, Azure Stack HCI 20H2 is currently in Public Preview with general availability expected before the end of the year.

A Storage Spaces Direct Foundation

Microsoft’s entry into the hyperconverged infrastructure market came with Windows Server 2016, which included the Hyper-V hypervisor and Storage Spaces Direct (S2D), a software-defined storage layer that enabled the virtualization of captive storage capacity on each node. Microsoft sold this product through server OEMs as part of the Windows Server Software Defined (WSSD) program, that was later renamed “Azure Stack HCI”.

This product did not get a lot of traction in the competitive HCI space, although the latest Evaluator Group HCI Study shows Azure Stack HCI adoption increasing over last year, but the technology was impressive. S2D runs in the Windows kernel, providing potential performance
and cost advantages over other HCIs that run as a VM. S2D is built on the Storage Bus Layer (SBL), a virtual bus architecture that creates a fabric connecting all disks across all nodes with using

SMB as the protocol transport. With a feature called SMB Direct, SBL can use RDMA-enabled NICs (iWARP or RoCE) over 25GbE and supports persistent memory (Intel Optane) for extremely low latency storage performance.

S2D is also the software-defined storage technology behind the Microsoft Azure cloud, and the Azure Stack on-premises solution (now called “Azure Stack Hub”) that the company has offered for several years. Microsoft has emphasized this common storage foundation from the beginning, as an advantage in creating a hybrid cloud architecture, but this concept didn’t resonate with a market that had not yet fully embraced the hybrid cloud. The name changes and a lack of focus on Microsoft’s part were factors as well. The company hopes to remedy that situation with the new Azure Stack HCI sold as a service through the Azure portal.

New Azure Stack HCI Operating System

The new Azure Stack HCI now has a stand-alone OS called “Azure Stack HCI v20H2” that’s designed to run VMs, not bare metal applications, although it does support MS SQL Server. It’s controlled by Windows Admin Center through which an HCI cluster can be created. This new Azure Stack HCI OS includes some new features as well.

  • Stretched clustering – a native disaster recovery functionality through volume level synchronous and async storage replication between local or remote clusters, with automatic VM failover
  • Faster resynch technology – finer grained tracking of changed data between volumes means faster storage synchronization after changes or restarts, 4-5x that of Windows Server 2019, according to the vendor
  • Driver and firmware updates are integrated with the OS upgrades (for selected OEMs)
  • Encryption – BitLocker encryption for data at rest
  • Delivered as Azure service, natively integrated with Azure Resource Manager (ARM) and managed from Azure portal
  • GPU acceleration

There are three deployment options for Azure Stack HCI. Customers can buy an integrated system, an “appliance experience” from three or four OEM partners or they can buy validated nodes from a group of 20+ partners, similar to the previous WSSD and Azure Stack HCI programs. The third option is for customers to build it themselves, following the same validated nodes specifications.

Microsoft has stated they are initially targeting existing HyperV users and trying to get them to run on HCI. As a subscription-based software service that is run on-premises, Azure Stack HCI is currently priced at $10 per core per month. It is managed through the Azure portal, enabling users to seamlessly connect to as subset of Azure cloud services and run them on-premises. These services currently include: Azure Site Recovery, Azure Monitor, Cloud Witness, Azure Backup, Azure Update Management, Azure Network Adaptor and Azure File Sync.

Implementing a Hybrid Cloud

HCI has become an accepted architecture for the on-premises portion of a hybrid cloud. Most major HCI vendors now emphasize their ability to connect to the public cloud for data protection, DR, monitoring, workload migration and other services. But they all begin in the data center and create different arrangements for the cloud portion of the solution, since they don’t own that part. They either resell the public cloud, require users to have their own cloud accounts or sell a cloud service that they have set up (one that itself is typically resident in one of the big three clouds).

The public cloud companies have historically offered only one side of the hybrid cloud solution as well, but now AWS and Google have on-premises solutions. AWS Outposts is essentially a version of the AWS software running in the data center, on AWS proprietary compute and networking hardware, that is installed and run by AWS as a service, but still owned by AWS. Google uses GKE (Google Kubernetes Engine) running on vSphere as the software foundation for their on-premises solution, but they require users to provide their own hardware or use a 3rd party partner to implement the solution.

Azure Stack HCI is an established on-premises solution that has been sold and used in the data center for a number of years. It is connected to an established cloud service that is also owned and operated by Microsoft, providing a common source for support, billing and product development. This combination should give users an option for their hybrid cloud with potential cost, simplicity or functional advantages over the offerings available from the public cloud companies or the HCI vendors.

Evaluator Group Comments

What Microsoft has done with Azure Stack HCI is create a hybrid cloud that enables applications running on this on-prem infrastructure to use some of the services available in Azure, mostly around data protection, DR and management. In that regard, Azure Stack HCI has some overlap with Azure Stack Hub.

What they have not done is create an HCI platform that runs in the public cloud, enabling workloads to be migrated between the on-premises infrastructure and the public cloud, or between public clouds to support activities such as cloud-native development. This is what VMware’s VCF or Nutanix Clusters offer. However, given the common Storage Spaces Direct architecture that Azure and Azure Stack HCI share, it is logical to assume more functionality is coming.


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