Azure benefit on Azure Arc

Hello Handian,

You are correct in your thinking. The "Activate Azure Benefit" for an Azure Arc-enabled server is functionally the same concept as the "Azure Hybrid Benefit" for a native Azure VM, but it's applied to your on-premises environment.

Let's break it down clearly.

Is "Activate Azure Benefit" the same as "Azure Hybrid Benefit"?

Yes, for all practical purposes, they are the same program.

• Azure Hybrid Benefit (for Azure VMs): This is the well-known program where you use your on-premises Windows Server or SQL Server licenses with active Software Assurance (SA) to get a significant discount on the cost of Azure VMs. You are essentially telling Microsoft, "I already own the OS/SQL license, so don't charge me for it in the cloud."
• Activate Azure Benefit (for Azure Arc): This is the extension of that same program to your on-premises servers or servers in other clouds (like AWS/GCP) that you manage with Azure Arc. By activating it, you are telling Microsoft, "This on-prem server is covered by my Software Assurance, so please unlock certain Azure benefits for it without double-charging me."

What Happens if You Don't Enable "Activate Azure Benefit"?

This is the crucial part of your question: "when we not enable the 'Activate Azure Benefit' this mean there is a cost for operating system license?"

The answer is nuanced but important:

• For the OS Itself: You are already responsible for licensing the operating system on your on-premises VM. You bought it, it's running in your datacenter. Azure Arc, by default, doesn't charge you for the OS license you already own.
• For Azure Services: The real cost comes when you start consuming additional Azure services on that Arc-enabled server. The primary service this benefit unlocks is Extended Security Updates (ESUs) for legacy operating systems like Windows Server 2012/2012 R2.

Here is the key distinction:

• WITHOUT Activating the Benefit: If you need to enable ESUs on your Arc-enabled Windows Server 2012 machine, you will be billed for the ESU license. This is a pay-as-you-go model, and the cost is billed monthly through your Azure subscription.
• WITH Activating the Benefit: If you have active Software Assurance (or an equivalent subscription) on your on-premises Windows Server license, you can "Activate Azure Benefit." When you then enable ESUs for that same server, the ESU license is free. You are entitled to it as part of your SA benefits.

Hi Handian Sudianto

Activate Azure Benefit’ in Azure Arc is similar to Azure Hybrid Benefit. If you have eligible Windows Server licenses with Software Assurance or subscriptions, you should enable it so that your existing licenses cover the Windows Server Management rights provided through Arc.

If you do not activate it, Azure assumes you are not bringing your own licenses and any chargeable Windows Server Management features you use via Arc may be billed per server instead of being covered by your entitlement.

Unlike Azure VMs, Azure Arc does not start a separate OS license meter; the Windows Server OS itself remains licensed under your existing on‑premises or subscription agreement.

Reference: https://dori-uw-1.kuma-moon.com/en-us/windows-server/get-started/azure-hybrid-benefit?tabs=azure