Maybe that’s a bit of a clickbait title, but hosters do need to be aware of the pros and cons of Arc. I agree with Microsoft in the fact Azure Arc is powerful, but it’s not a replacement for SPLA, and some hosting scenarios become challenging under its model. In practice, Arc operates largely as a BYOL licensing scenario.

• SPLA cannot be used for Arc PAYG billing
• SPLA cannot be used in Listed Provider environments after 2025
• Arc’s billing and compliance model is customer‑centric, not hoster‑centric
• PAYG is not significantly cheaper than SPLA as it is often promoted. It is less expensive when you add certain incentives, but you do have to qualify for those incentives.
• Compliance risk. This drops significantly when you move to Arc versus SPLA. That is a positive and one reason in audit settlements, this is a negotiation tactic.

While Azure Arc delivers strong hybrid management capabilities, it falls short for traditional hosters and service providers who need predictable, scalable, multi‑tenant environments. Historically, hosters use SPLA to maximize VM capacity, monthly pricing that is very stable, and the ability to spread licensing across shared infrastructure (such as Windows Datacenter). As much as hosters complain about SPLA, it is very flexible and does offer a proven business model for over 20 years.

Is Arc or SPLA the best fit for your datacenter? The good news is you don’t have to go all in for SPLA or all in for Arc. In most cases, you can baby step your way into Arc. What I don’t recommend is committing to Arc based on audit findings. Arc does change the way you do business and go to market with your customers.

Have a question about Arc? Feel free to shoot me an email at info@splalicensing.com

Thanks for reading,

SPLA Man