The product of engineering collaboration between Dell and Microsoft, Dell AX System is a purpose-built, continuously validated, and rigorously tested solution for hosting on-premises Azure Local instances. Customers benefit from the Dell enterprise support portfolio for the entire end-to-end solution—including deployment, configuration, management, and maintenance—from dedicated Azure Local experts.⁷ This integrated solution empowers businesses to confidently meet evolving operational and workload demands in the challenging modern distributed architecture and hybrid cloud landscape.

Overview of Azure Local

As enterprises continuously modernize their IT environments, they face increasing pressure to balance agility with control, scale with security, and innovation with operational consistency. Many organizations operate across multiple sites or data centers in addition to the public cloud, each with its own requirements for latency, compliance, and workload performance. Public cloud alone often can’t meet these needs, particularly when data locality, regulatory and compliance requirements, or application performance constraints require infrastructure to remain on premises. Microsoft answers this challenge with Azure Local.

Azure Local extends Azure-native services and capabilities to on-premises infrastructure in the form of Azure Local instances, enabling organizations to deploy virtual machines and containers directly via the Azure portal and manage them just as they would Azure cloud resources.⁸ This unified control plane simplifies operations across hybrid and distributed environments by consolidating provisioning, governance, monitoring, lifecycle management, and orchestration for both public and private cloud resources into a single interface. Whether managing a single site or a global network of data centers, Azure Local provides a consistent Azure-native resource management model that reduces operational complexity across distributed architecture, especially for organizations that are already heavily invested in the Azure cloud ecosystem.

By extending the capabilities of Azure APIs, Azure Resource Manager (ARM) templates, and Azure portal management tooling to private cloud infrastructure, Azure Local helps simplify operations, streamline development workflows, reduce training overhead, and accelerate application delivery.⁹ It also enables organizations dealing with sensitive and highly regulated data—where data sovereignty and locale are of paramount concern—to keep their data on-premises while still benefiting from Azure-native services, helping meet strict compliance requirements in industries like finance, healthcare, and government. For workloads that require real-time responsiveness and minimal latency, like manufacturing systems or transactional databases, Azure Local also ensures that compute and storage resources are physically close to the data and applications they support.

Azure Local supports deployments from 1 to 16 AX nodes per instance.¹⁰ With Azure Local, teams can run a subset of Arc-enabled services on-premises, such as Azure Kubernetes Service¹¹ and Azure IoT Operations.¹² This enables organizations to scale on-premises infrastructure as needed while maintaining centralized control over resources, even across many physical sites. Azure Local also integrates with Azure management and governance services, such as Azure Policy,¹³ Azure Update Manager,¹⁴ and Azure Local Insights in Azure Monitor.¹⁵ Several other Azure services are currently in preview for Azure Local, including Azure Defender for Cloud,¹⁶ Azure Migrate,¹⁷ and Azure Site Recovery.¹⁸ Provisioning a virtual machine or container in an Azure Local instance is no different than deploying one to the Azure public cloud, and a single Azure Local instance can host both VMs and containerized applications or services side by side, enabling organizations to consolidate diverse workloads.

To allow organizations to choose between operational and capital expenditure approaches to on-premises infrastructure, Azure Local instances are available in both subscription and one-time licensing models.

• Subscription licensing model: The price for this pay-as-you-go licensing model is $10 per physical core per month, with the option to add unlimited Windows Server 2025 Datacenter guest licenses for an additional $23 per core per month.¹⁹ This model is suitable for organizations seeking flexibility, predictable monthly expenses, and the ability to dynamically scale infrastructure as business needs evolve.
• OEM licensing model: Organizations preferring a one-time capital expenditure can acquire an OEM license for Azure Local at time of purchase. This license covers the entire life of the hardware with no recurring charges, and includes unlimited Windows Server 2025 Datacenter guest VMs and unlimited on-premises containers with Azure Kubernetes Service on Azure Local.²⁰

Microsoft also offers the Azure Hybrid Benefit, which allows organizations with existing Windows Server 2025 Datacenter core license subscriptions and active Software Assurance to exchange them on a one-for-one basis for Azure Local core licenses.²¹ This provides a cost-effective path to hybrid cloud and Azure Local adoption for enterprises already heavily invested in Microsoft licensing. In addition, Microsoft provides free Extended Security Updates (ESUs) for legacy versions of Windows Server or SQL Server running on Azure Local.²²

Azure Stack HCI is now a part of Azure Local, the Microsoft hybrid infrastructure platform. It combines a robust Azure cloud-native management experience with fully pre-validated and preconfigured hyperconverged hardware solutions such as the Dell AX System, which benefit from extensive engineering collaboration between Dell and Microsoft as well as the full Dell enterprise support portfolio. These solutions are engineered with a “secure by default” design philosophy²³ that implements security standards and enhancements such as BitLocker data encryption, Windows Defender Application Control (WDAC), SMB signing, and Trusted Launch. The fusion of single-pane-of-glass cloud-native operations and management with the security and control of on-premises infrastructure makes Azure Local a compelling choice for enterprises seeking to modernize their infrastructure without sacrificing flexibility, compliance, or performance.

Overview of Dell AX System for Azure Local

Microsoft categorizes all official Azure Local hardware solutions into three tiers: Validated Nodes, Integrated Systems, and Premier Solutions.²⁴ Each tier reflects a different level of integration, validation, and support. Premier Solutions for Azure Local offer the highest standard of turnkey deployment and functionality, continuous hardware and software validation, and end-to-end enterprise-grade support from dedicated Azure Local support technicians.

As a Premier Solution for Azure Local, the Dell AX System for Azure Local is the result of careful engineering and preconfiguration by Dell and Microsoft to deliver the most robust and streamlined Azure Local experience available. To learn more about all of the Premier Solutions for Azure Local offered by Dell, see the Microsoft Azure Local solutions catalog or the Dell AX System for Azure Local solution brief.

Deep engineering collaboration between Microsoft and Dell

The Dell AX System for Azure Local uses a specially prepared golden image for the Azure Local operating system that includes extensive Dell and Microsoft customizations to ensure consistency, security, and compatibility across environments and data centers. This image incorporates a Dell Solution Builder Extension (SBE) package that includes the latest validated firmware, drivers, and security policies to maintain a known-good state and security posture.²⁵Dell provides enhanced automation, orchestration, and monitoring capabilities through its exclusive Dell OpenManage Integration with Microsoft Windows Admin Center and its integrations with Azure management and governance services such as Azure Monitor, Azure Policy, and Azure Update Manager.²⁶

Azure Update Manager orchestrates updates across all parts of the hardware and software stack,²⁷ including BIOS, OS, firmware, and driver updates²⁸ as part of a unified lifecycle management process contained within the Azure portal. This includes proactive health and compatibility checks to ensure a seamless update experience and leverages Cluster-Aware Updating (CAU) to maintain uninterrupted workload availability during system updates.²⁹

Dell-specific Azure Policy definitions enabled by the Dell OpenManage integration with Windows Admin Center help identify compliance issues directly in the Azure portal, including:

• Dell Hardware Configuration Policy to assess BIOS, driver, firmware, and iDRAC configuration compliance
• Dell Infrastructure Lock Policy for iDRAC lockdown mode to prevent accidental configuration changes
• Dell Hardware Symmetry to assess hardware compliance when adding or swapping hardware components, and
• Dell OS Configuration Policy to assess OS configuration compliance.

Teams can then remediate issues in the Dell OpenManage integration with Windows Admin Center.

Dell AX System node hardware alerts are also pulled directly into Azure Monitor via the OpenManage integration.³⁰ Dell OpenManage periodically sends iDRAC-based lifecycle controller log events to an Azure Monitor Log Analytics workspace and configures hardware alert rules based on a user-defined severity threshold.”³¹

Notably, our research found that Dell PowerFlex offers the only external block storage available in a Microsoft-validated Azure Local solution. At present, all other Azure Local solutions rely on the default hyperconverged storage configuration using Storage Spaces Direct (S2D). Organizations can independently scale compute and storage resources; take advantage of PowerFlex’s massive scalability, performance, and availability capabilities; and extend a universal storage layer across both public and private clouds by using PowerFlex. These capabilities are not currently available from other Microsoft-validated Azure Local solutions.

Azure Local with PowerFlex

Limitations of traditional hyperconverged infrastructure

By definition, traditional hyperconverged infrastructure (HCI) architectures, including those used by default in Azure Local deployments, have tightly coupled compute and storage resources. While this simplifies deployment and management for smaller environments, it also introduces limitations as business needs evolve and infrastructure scales. Organizations must generally increase both compute and storage by adding HCI nodes that contain both resources, even if they need only one or the other. Doing so can lead to inefficiencies, overprovisioning, and increased costs.

By connecting Azure Local instances with PowerFlex, the Dell AX System for Azure Local creates a disaggregated infrastructure architecture that leverages PowerFlex external block storage as the storage backend for one or many Azure Local instances. This gives organizations the flexibility to scale storage without scaling compute, allowing them to right-size their workloads and optimize operational expenditures by aligning infrastructure growth more directly with workload demands.

Benefits of using Dell PowerFlex

In addition to the benefits of decoupling compute and storage when scaling infrastructure, PowerFlex has a wealth of capabilities and features that meet enterprise-scale workload demands. PowerFlex supports a wide range of workload types, from transactional databases and virtual desktop infrastructure (VDI) to AI/ML pipelines and real-time analytics, on a single, unified storage platform. This helps to eliminate silos and simplify infrastructure management. PowerFlex also offers consistent high-performance I/O and predictable, near-linear performance at scale for critical and data-intensive applications, as well as six-nines (99.9999%) availability, rapid storage rebuild/rebalance capabilities, and robust fault tolerance, ensuring minimal downtime and high resiliency for important workloads.³²

A single PowerFlex deployment can serve as the shared storage backend for multiple Azure Local instances—as well as other infrastructure platforms in the data center—and can connect directly to Dell PowerFlex for Microsoft Azure-native management and monitoring of resources deployed on it. According to Microsoft, PowerFlex for Azure ensures seamless data mobility, improved TCO, unmatched performance and linear scalability, and unparalleled resiliency across hybrid environments.³³ PowerFlex is also massively scalable to an extent not feasible with traditional HCI deployments. This integration is especially valuable for enterprises with large-scale, performance-sensitive, or rapidly evolving workload demands that exceed the capabilities of traditional hyperconverged infrastructure architectures. Read more about Dell AX System for Azure Local with Dell PowerFlex in this solution brief.

Dell performance testing for AX System with PowerFlex

To validate the real-world benefits of using Dell PowerFlex as the storage backend for Azure Local instances on Dell AX System, the Dell performance engineering team conducted performance benchmarking to assess how well PowerFlex scales in terms of storage performance across different Azure Local instance sizes and workload types. We base this section on the Dell white paper Reliable Performance at Scale: Dell AX System for Azure Local with PowerFlex. Their test environment consisted of Azure Local instances running on Dell Cloud Platform MC-660 nodes (largely equivalent to the Dell AX System 660 hardware stack) for compute, paired with a Dell PowerFlex cluster built on PowerFlex Appliance R660 S nodes for storage. Both node types are based on the PowerEdge R660 platform and configured with dual 100GbE network interfaces. The Dell test team scaled the environment incrementally from 4 to 12 machines for both the AX System compute and PowerFlex storage clusters, configuring PowerFlex with one storage volume per machine throughout the testing. Figure 1 illustrates their testing process.

Overview of performance benchmarking

The Dell test team used VMFleet 2.1.0, the Microsoft synthetic storage load generation and benchmarking tool, to simulate real-world workload types. VMFleet deploys an array of virtual machines and runs DISKSPD commands to generate storage I/O, capturing performance metrics such as IOPS, latency, and throughput. Testing used VMFleet’s standard CoreFleetWorkload command, which consists of four sequentially run predefined storage workload profiles designed to simulate common workload types:

• General, which simulates a typical mixed read/write workload
• Peak, which maximizes IOPS as a stress test
• VDI, which emulates a traditional virtual desktop infrastructure workload
• SQL, which simulates an OLTP transactional database workload.

Table 1 shows the test parameters.

This set of synthetic workload benchmarks ran on Azure Local instances increasing in size from 4 to 12 machines in one-node increments, with the PowerFlex storage cluster scaling in tandem. Dell tested each instance size with both 20-VM and 32-VM configurations.

Performance testing results and analysis

Results from Dell testing showed strongly linear and predictable scaling of storage performance across all four workload profiles. As the number of nodes in the Azure Local instance and PowerFlex cluster increased, total IOPS increased proportionally, with minimal performance degradation even at larger instance sizes (see Figures 2 through 5).

This near-linear consistency and predictability when scaling enables organizations to confidently plan infrastructure growth and right-size deployments based on workload demands. Additionally, Dell reports that CPU utilization for storage overhead remained low throughout testing, with a representative 10-node cluster showing less than approximately 20 percent CPU usage during a full test run, highlighting the efficiency of the PowerFlex architecture. Unlike traditional HCI models where compute nodes also handle all storage operation overhead, PowerFlex offloads storage processing to its own dedicated nodes, preserving Azure Local instance compute resources for application workloads.

Conclusion

As distributed architecture and hybrid cloud strategies become increasingly important to enterprise IT operations, organizations need infrastructure and management tools that can scale seamlessly, perform reliably, and adapt to evolving business and workload demands. Azure Local provides a powerful foundation for managing distributed on-premises infrastructure with Azure-native tools and services, while the Dell AX System elevates this experience through deep integration, continuous hardware and software validation, and enterprise-grade support for deployment, management, and maintenance.

By incorporating Dell PowerFlex as an external storage backend, a capability currently unique to Dell in the official Microsoft solutions catalog for Azure Local, the Dell AX System can benefit from the flexibility, scalability, and efficiency PowerFlex provides. It enables independent scaling of compute and storage, supports a wide range of diverse workloads on a single unified storage platform, and delivers massive scalability, consistent high-performance I/O with six-nines availability, and robust fault tolerance. These capabilities go beyond what a traditional HCI configuration with Storage Spaces Direct can offer, making PowerFlex a strategic differentiator for organizations with complex, performance-sensitive, or large-scale infrastructure requirements.

Together, the Dell AX System for Azure Local and PowerFlex empower enterprises to streamline operations, consolidate workloads, reduce infrastructure silos, and future-proof their hybrid cloud environments while maintaining centralized control across deployments and physical sites through the Azure portal. If your organization is facing challenges with scaling storage independently of compute resources, accommodating a diverse variety of workload types in a single universal storage layer, or operating at a scale where consistent performance and availability are critical, Dell AX System with PowerFlex could deliver the flexibility, performance, and resilience your hybrid cloud strategy needs. Potential customers can explore a proof of concept through Dell Customer Solution Centers or an on-premises “Try ‘n Buy” deployment.