If you’ve been following Broadcom’s VMware licensing overhaul, you’re aware of the severe changes that have impacted VMware hosters. VMware economics for SMB environments are no longer feasible, and partners must rethink their hosted offerings. For many hosters, these changes aren’t incremental — they fundamentally invalidate the VMware-based business model.
Gartner predicts 35% of VMware workloads will migrate by 2028.
Over the past two years, Broadcom has systematically dismantled the VMware Cloud Service Provider (VCSP) program that many hosters and MSPs have relied on to deliver infrastructure services to their customers. The changes came in waves. First came the shift to subscription-only licensing and forced bundling. Then it was higher minimum core requirements and hardware constraints. Finally, they moved to an invitation-only partner model. The result is higher costs, more complexity and an exclusivity that’s left the vast majority of SMB service providers in need of an exit strategy.
Impacted hosters face three options:
- Migrate existing VMware workloads to one of Broadcom’s approved partners, effectively handing their customers to another platform.
- Consider alternative hypervisors.
- Modernize with hybrid and cloud native options.
Only option three provides long-term cost predictability, growth flexibility and access to modern workloads like AI.
This blog explains how hosters can leverage Microsoft’s adaptive cloud via hybrid and Azure migrations to grow their SMB client base and drive AI innovation.
Future-Proof Your Data Center with Azure
Azure cloud is the best opportunity to create a sustainable data center practice that enables your customers to experience the full potential of AI while generating predictable recurring revenue for your reseller business. It’s Microsoft’s secure, compliant multi-tenant platform with built-in scalability and cost efficiency available to all hosters via the Cloud Solution Provider (CSP) program. With Azure, you’re no longer forced into 72-core minimums or hardware refresh cycles. You’re not locked into bundles you don’t need or locked out of the market because you’re not a top strategic partner.
For SMB-focused partners, the case for Azure goes well beyond resolving the VMware disruption. Azure opens the door to a fundamentally stronger and more scalable business model. By embracing Azure, partners gain access to AI capabilities built directly into the platform, providing seamless alignment with Microsoft 365 to deliver a fully integrated customer experience. In addition, they can fully manage customers without the burden of physical infrastructure challenges.
Rather than being constrained by a capital-intensive data center footprint, partners can expand their reach and capacity on demand. Azure also makes it easier to meet customer compliance requirements out of the box and empowers partners to offer new solutions without needing to build everything from scratch. Most importantly, it positions SMB partners to capture the larger market opportunity that a public cloud represents – a growing share of IT spend that on-premises infrastructure simply cannot address.
A Predictable, Well-Managed Experience
Microsoft Azure offers pay-as-you-go billing for built-in scalability and cost efficiency, so billing is only based on what you use. The Pax8 Marketplace simplifies Azure management:
- Predictive cost analytics calculate data to enable optimization of techniques and strategically lower costs.
- Threshold management notifies you when approaching customized, consumption-based thresholds.
- Detailed billing shows your clients’ granular billing data.
At Pax8, every Azure partner gets a regional infrastructure solution consultant who provides key pre- and post-sale support. We begin the journey with introductory discussions — going through pricing exercises, facilitating discovery calls with the Pax8 Professional Services team and helping build go-to-market strategies. This is a meaningful contrast for partners who have operated exclusively in the Services Provider License Agreement (SPLA) model, where support is limited. By embracing CSP and Azure, partners gain access to a wealth of Microsoft resources from incentives and go-to-market tools to technical enablement and dedicated support to help further their business.
“We engaged the Pax8 Professional Services team to help us with a few Microsoft Azure deployments. They helped us identify cost savings for one client that not only made him happy but also made him a client for life.” – Peter Avery, Visual Edge IT
A Partnership That Rewards Growth
Let’s talk about what a healthy partnership actually looks like. Microsoft invests deeply into their partner ecosystem, and the Azure CSP incentives are particularly valuable to partners who expect accelerated Azure growth. Especially hosters planning to migrate.
As a Microsoft CSP partner, you can earn margin on every Azure service you sell while stacking incentives and leveraging implementation funding available in the Microsoft AI Cloud Partner Program (MAICPP). But the best opportunity you can take advantage of today is the Datacenter Optimization (DCO) program that’s purpose-built exactly for your scenario – when infrastructure decisions and customer migrations are already underway. This program rewards partners for accelerated Azure Consumed Revenue (ACR) growth over a 12-month period, ideal for hosters planning to migrate on-prem data centers. There are no penalties if you don’t hit your growth targets in the program, and you can leverage exclusive benefits like:
- Pax8 Professional Services funding for migrations
- Azure deal support
- Engineering escalation support
- Best practice guidance
- Technical skill building
- Workload alignment
- Migration planning and tooling
On top of access to a broad incentive portfolio and growth investments, Microsoft CSP partners also gain access to customer intelligence through CloudAscent, which takes internal Microsoft and external data then delivers high propensity SMB customer targets to partners while outlining up-sell and cross-sell opportunities. Plus, Microsoft’s partner program offers a vast collection of go-to-market resources to help partners build brand awareness and nurture leads.
Monetize Today, Migrate Tomorrow
If you’re a hoster using VMware, you may have invested in a recent hardware refresh that you’d still like to monetize. Or you may have specific sovereignty requirements or data center commitments that demand on-premises infrastructure. That doesn’t mean you’re stuck with VMware.
Azure Local and Azure Arc are your bridge solutions. They allow you to continue monetizing existing hardware investments while you build your future migration plan to Azure native. And while benefiting from Microsoft Cloud Solution Provider (CSP) partner economics in the meantime.
Azure Local extends Azure’s compute, storage and AI capabilities directly into your data center as a single-tenant solution. Your existing hardware keeps working, but now it’s governed through Azure’s control plane with Azure’s security, compliance and cost management tools.
Azure Arc lets you manage and govern any infrastructure (whether it’s VMware, Hyper-V or others) through a unified Azure dashboard. You get Azure governance, security services and data services extended across your hybrid environment without ripping and replacing everything.
Together, they give you the space to keep generating revenue from existing assets while you plan for a smooth migration to Azure native in the future.
Expanding Services with Modern Infrastructure and AI
Exiting VMware isn’t just about reducing costs, it’s about unlocking things legacy private clouds were never designed to support. Most on-prem environments lack the elasticity, data integration and security foundation required for scalable AI adoption. Azure removes these constraints. For customers wishing to expand into AI, cloud native platforms offer the most advanced and scalable AI services.
Copilot and AI Agents
Azure is the backbone that makes Microsoft 365 Copilot more powerful and more secure.
Your data stays yours and stays protected. Copilot in Microsoft 365 draws on your organization’s data to generate responses. Azure’s built-in security and compliance infrastructure (including Microsoft Entra ID, conditional access and data governance controls) ensures that Copilot only surfaces information to the people who are authorized to see it.
Microsoft Foundry and Copilot Studio let customers go even further. Businesses can build their own custom AI agents in Foundry that are trained on their specific data, workflows and business terminology using the most powerful models like OpenAI, Anthropic and more. With Copilot Studio in Foundry, SMBs can build and deploy agents that automate business processes without the need for advanced developer skills.
But access to great models is just one part of the equation. AI is only as good as the data behind it. With Microsoft Fabric on Azure, businesses can connect their analytics, operational data and business applications into a single intelligent layer — so the AI apps and agents you’re building are reasoning on clean, unified information rather than scattered data silos.
Getting Started with Microsoft Azure and Pax8
Pax8 has the deep Azure expertise necessary to help you develop a high-growth Azure practice. With our education and enablement resources, you can learn how to sell and deploy Azure with confidence.
- Azure Kickstart: Gain fundamental knowledge of Azure and develop the technical fundamentals for pricing, selling, deploying and managing key Azure technologies through Instructor-Led Training.
- Hands-On Labs: Get guided, hands-on experience on how to perform Azure migrations and deploy Azure solutions from start to finish.
- Professional Services: In partnership with Microsoft, Pax8 Professional Services offers discounted migrations for Azure infrastructure services. Through this program, customers moving into net-new Azure may qualify for funding towards Professional Services costs for projects completed by Pax8. Check if your project qualifies and reach out to your Pax8 account team to get started.
Whether you’re looking to migrate your data center to Azure or need to hybridize workloads as part of a phased transition, Pax8 is here to help make it happen.
