Azure Dedicated hosts: more expensive than regular Azure VMs?

To make the transition to Azure easier for Hosters running their customers’ workloads on a large virtualized host environment, Microsoft introduced Dedicated Hosts in 2020. In this blog we will answer whether this brings cost benefits compare with the regular Azure VMs?

What is a Dedicated Host?

An Azure Dedicated Host (Azure Dedicated Host | Microsoft Azure) is its ‘own’ single-tenant physical server that is not shared with other customers and on which VM’s running Windows or a Linux variant. An Azure dedicated host does not mean that a customer can freely configure VMs as they see fit. You must choose from a number of common Azure VM series: Dsv3, Dsv4, Dasv4, Dcsv2, Esv3, Esv4, Easv4, Fsv2, Lsv2, Msv2, Msmv2, NVsv4 and NVasv4. Enough to serve just about any workload.

Only one (1) type of VM series can run per host. The designation of the host is the combination of the type and the selected VM series that will run on the host. The type says something about the processor used by the host and thus the availability of the number of physical physical cores, vCPUs and GBRAM. I have not (yet) been able to discover any logic between the Type host and the VM series that run on it.

Understanding the differences in types of Dedicated Hosts

Example: For D-series VMs, the vCores relate to the GBRAM as 1: 4. For each vCores you have 4 GBRAM. Now if you take the Dsv4_Type1 Host or the Dsv3_Type3 host, the configuration is: 52 pCores, 80vCPU and 504 GBRAM, based on a Platimum8272CL processor. If I were to use all 80 vCPUs I would still not be using more than 320 GBRAM. In other words, 184 GBRAM remains un used.

The Esv4_Type 1 and Esv3_Type3 hosts have the same configuration and processor in use as before. The ratio vCPU / GRBAM for E-series is a factor of 8. So if I were to use all v80 CPUs here too, you would need 640 GBRAM, but you only have 504 max. That means you can go up to a maximum of 63 vCPUs per host if run E-series on it.

In other words, the choice of your host type is largely determined by the occupancy rate of your host that can be achieved. The more you use it, the more attractive the price becomes.

Operating System cost

You can buy any Operating Systems Pay-as-you-Go available on Azure at the host. The prices are exactly the same as with regular Azure VMs and based on the number of vCores in use by the VMs and not the available number of vCores

This is in contrast to the Azure Hybrid Benefit, where for the settlement of the licenses only the physical cores used are considered and not the number of vCPUs used, this applies to both the Windows Server and SQL. You can also run CSP subscription licenses under AHB on the Hosts.

In terms of Azure Optimization benefits, the following:

Before purchasing hosts, it makes sense to ask yourself whether you can work with smaller, right-sized VMs, and with fewer or smaller hosts.

Snoozing makes no sense, because hosts cannot be turned off and you pay for the Host and not for the VMs running on it. So you should only use hosts for those VMs that have to run continuously. Or you buy them as a Reserved Instances, a commitment for 1 year provides a discount of 41% and for three years 62%. Comparable to that of the regular VMs.

The cost difference

To answer the question in the title of this blog, it is very much the question of how well the underlying hosts are used. In addition, you should not forget that in a dedicated host more management tasks lie with the customer, with regard to management, than with regular VMs. I estimate the additional costs for management at 8% of the host costs.

Here is an example of a cost comparison between regular VMs and the same volume of VMs deployed on Dedicated Hosts.

Suppose you have an existing host infrastructure with 250 VMs that use a total of 872 vCores and 4256 GBRAMs. The GBRAM / Core ratio is a factor of 4.8. This means that we start from D-series and you can choose from 6 different VM-series / type of hosts.

Host price specification for D-series:

Number of host needed based to host 872 cores and 4256 GBRAM and the calculation how many hosts needed and what the total monthly price will be (without any OS)

For comparison, here are the costs for all these VMs implemented as regular Azure VMs with at least the same amount of vCores and of 872 cores and 4256 GBRAM.

Conclusion

The price difference is strongly dependent on the occupancy rate and the chosen VM series. The biggest advantage of Dedicated Host compared to regular VMs is if you choose older VM series, the advantage can then amount to 15%.

In other words, Dedicated Host are not deployed to gain significant cost advantage, but rather to please those customers who, for whatever reason, do not want to run their workloads on shared hosts. A rather persistent residual sentiment with regard to data security.