Clarification on ESU cost for SQL Server 2016 on Windows Server 2016 in Azure VMware Solution

Thank you for your earlier clarification that Extended Security Updates (ESUs) are free for SQL Server 2016 when running on Azure VMs, as long as the ESU program is active.

I would appreciate further clarification regarding the following Microsoft announcement: https://www.microsoft.com/en-us/licensing/news/services-pricing-consistency-update

The article states:

• “Customers who use Windows and SQL Server Extended Security Updates released on or after April 1, 2026, will see the same pricing whether they purchase in Azure or outside Azure.”
• “The new pricing model will apply starting April 1, 2026, for any new Extended Security Updates offerings… This does not apply to existing offerings, including … SQL Server 2014.”

My question:

For SQL Server 2016 running on Azure Virtual Machines, does this pricing change mean that:

• ESUs will remain free for SQL Server 2016 (as previously confirmed), since it is part of an existing ESU offering,

or

• ESUs for SQL Server 2016 will become chargeable after April 1, 2026 under the new standardized pricing model?

1. For SQL Server 2016 on AVS after July 2026

For SQL Server running in Azure VMware Solution, Extended Security Updates are free as long as the workload is running in Azure (including AVS) and the ESU program for that product/version is still active.

The documentation states that:

• ESUs are free for SQL Server and Windows Server when running in Azure destinations, including Azure VMware Solution.
• For SQL Server in AVS, ESUs are enabled and managed via Azure Arc and the Azure Extension for SQL Server on the AVS VMs.

There is no statement in the provided documentation that ESUs for SQL Server 2016 in AVS become billable after July 2026. Instead, the documentation describes the general ESU model: ESUs are available for up to three years after end of support, and in Azure (including AVS) those ESUs are free above the cost of running the VM, while the ESU program is active for that product.

Therefore, as long as SQL Server 2016 is within its ESU coverage window and is running on AVS as an Azure destination, ESUs are free; when the ESU program for SQL Server 2016 ends, ESUs are no longer available at all (free or paid).

2. ESUs for Windows Server 2016 in AVS

The documentation states:

• “Extended Security Updates are also free in some Azure products. These products include Azure Dedicated Host, Azure VMware Solution, Azure Nutanix Solution, Azure Local, and Azure Stack Hub and Edge. Some of these products might require extra configuration.”
• For Windows Server specifically in AVS, “Currently, there's no way to register your Windows licenses in Azure VMware Solution.”

For Windows Server in Azure generally, applicable VMs hosted in Azure are automatically enabled for ESU at no additional charge if configured to receive updates. For AVS, ESUs are also free, but AVS may require extra configuration and, for Windows Server, there is currently no in-portal registration mechanism for Windows licenses.

The requirement to contact Microsoft Support or perform extra configuration does not introduce an ESU charge for Windows Server in AVS; it only reflects that AVS and some other Azure products are not automatically wired like native Azure VMs and may need additional setup to receive ESUs. The ESUs themselves remain free in Azure destinations, including AVS, while the ESU program for that Windows Server version is active.

3. Licensing and cost differences between SQL Server and Windows Server ESUs in AVS

From the provided documentation, the key differences are operational, not pricing:

• Pricing/entitlement in Azure (including AVS):
  • ESUs are free for both SQL Server and Windows Server when workloads run in Azure destinations such as Azure VMs, Dedicated Host, Azure VMware Solution, Nutanix Cloud Clusters on Azure, and Azure Stack portfolio. This applies for the ESU coverage period (up to three years after end of support for the given product).
  • Software Assurance is not required to get free ESUs in Azure, but is required if using Azure Hybrid Benefit for base licensing discounts.
• Configuration and management in AVS:
  • SQL Server in AVS:
    • Must be Azure Arc–enabled.
    • Requires the Azure Extension for SQL Server installed on the AVS VM.
    • ESUs and patching are configured and automated via Azure Arc and the SQL Server configuration blade (or PowerShell/CLI) for that Arc-enabled server.
    • If SQL Server instances are registered in a way that does not associate them with AVS via Azure Arc guest management, the VM is not treated as part of AVS and ESUs may be billed.
  • Windows Server in AVS:
    • ESUs are free in AVS as an Azure destination, but there is currently no mechanism in AVS to register Windows Server licenses in the portal.
    • Some Azure products (including AVS) may require extra configuration and potentially a support request to ensure ESUs are delivered, but this does not change the “free ESU in Azure” entitlement.

In summary:

• SQL Server 2016 ESUs in AVS are free while the ESU program for that version is active, provided the SQL Server instance is correctly Arc-enabled and associated with AVS.
• Windows Server 2016 ESUs in AVS are also free as part of Azure ESU benefits, but require different operational handling because Windows licenses cannot currently be registered in AVS, and extra configuration/support may be needed.
• The difference is in how ESUs are configured and tracked (Arc-based configuration and license tracking for SQL Server vs. no in-portal registration for Windows Server), not in ESU pricing within AVS.

References:

• ESUs for SQL Server and Windows Server in Azure VMware Solution VMs
• License SQL Server, Windows Server, and Linux in Azure VMware Solution
• How to get Extended Security Updates (ESU) for Windows Server
• Lifecycle FAQ - Extended Security Updates
• SQL Server Extended Security Updates enabled by Azure Arc
• SQL Server end of support options