The State of Azure Local in 2026
Two years ago this month, I wrote my first post on this blog about what Azure Stack HCI is in 2024 . At that time, Azure Stack HCI 23H2 had just launched, the Arc Resource Bridge was new, and the Premier Solution category had been freshly announced. The platform was a cloud-connected operating system that was in the process of becoming something much more.
Looking at where we are now in March 2026, the transformation has been nothing short of remarkable. It feels like the right moment to take stock.
The Journey
Let me trace the arc of the past two years, because the speed and direction of change is the story.
In early 2024, Azure Stack HCI 23H2 was a hyperconverged infrastructure solution running on up to 16 nodes, with an Arc Resource Bridge providing Azure connectivity, and Azure Arc Extensions delivering features. It was impressive for what it was, but it was still fundamentally an HCI platform.
The Broadcom acquisition of VMware in late 2023 and the subsequent licensing upheaval through 2024 created a market disruption that accelerated adoption and interest in alternatives. Azure Stack HCI, and then Azure Local, was a primary beneficiary of that disruption.
Windows Server 2025 landed in November 2024, bringing a new kernel generation and features like native NVMe and hotpatching that strengthened the foundation.
The rebrand to Azure Local at Ignite 2024 signalled a strategic repositioning. No longer an HCI product, but cloud infrastructure for distributed locations. The new versioning model with the 2411 release made the update cadence cleaner and more predictable.
Through 2025, the platform expanded in every direction. AKS matured for on-premises Kubernetes. GPU support enabled AI workloads at the edge. Dell AX achieved Premier Solution status . Sovereign cloud became a primary use case. Hotpatching reduced operational overhead. PowerFlex and then PowerStore brought enterprise storage options.
And then Ignite 2025 blew the doors open. Multi-rack scale to hundreds of servers. SAN support. Blackwell GPUs. M365 Local . Disconnected operations . The platform went from an HCI solution to a comprehensive private and sovereign cloud platform in the space of two years.
Where We Are Now
In March 2026, Azure Local is:
A multi-scale platform. From single node edge deployments to 16-node HCI clusters to multi-rack deployments with hundreds of servers. The deployment models now cover everything from a branch office closet to a full data centre floor.
A multi-storage platform. Storage Spaces Direct for HCI, PowerFlex for disaggregated software-defined storage, PowerStore and other vendors for SAN connectivity. The “one size fits all” storage story is gone, replaced by choice and flexibility.
An AI-ready platform. NVIDIA GPU support from professional RTX cards to Blackwell Server Edition, with support for thousands of AI models running locally. Sovereign AI is a real and growing use case.
A sovereign cloud platform. Connected, intermittently connected, or fully disconnected. M365 Local for productivity workloads. Disconnected AKS for containers. The full spectrum of connectivity modes is now supported.
An Azure platform. Managed through Azure, billed through Azure, governed through Azure Policy, monitored through Azure Monitor, secured through Azure security services. For connected deployments, the consistency with public Azure is genuine and meaningful.
The Dell AX Perspective
Dell’s position in the Azure Local ecosystem has strengthened considerably over these two years. The AX system portfolio covers the full range of deployment scenarios, from compact edge nodes to high-performance data centre systems. Premier Solution status provides the validation framework that enterprise customers require. And the expanding storage portfolio, with PowerFlex for software-defined storage and PowerStore for enterprise SAN, gives customers genuine choice in how they architect their environments.
The Dell AX system has a clear and straightforward go-to-market story. It’s Dell’s premier hardware system for Azure Local, and that simplicity in positioning reflects the maturity of the solution.
The integrated support experience between Dell and Microsoft, the CI/CD validated updates through the Solution Builder Extension, and the expanding hardware portfolio position Dell AX well for whatever comes next.
What’s Next
Predicting the future is always a fool’s errand, but there are a few directions that seem probable.
Scale will continue to expand. The multi-rack architecture introduced at Ignite 2025 is the beginning, not the end. Expect larger deployments, more sophisticated resource management, and better tooling for managing large estates of Azure Local instances.
Storage integration will deepen. SAN support is Fiber Channel first, but other protocols are on the roadmap. The integration between Azure Local management and storage lifecycle management will tighten. Expect a more unified operational experience across compute and storage.
AI workloads will grow. As models get smaller and more efficient, and as inference hardware gets more capable, the percentage of AI workloads running on-premises will increase. Azure Local’s GPU support and disconnected AI capabilities position it well for this trend.
Sovereign cloud will become mainstream. What’s niche today will be normal tomorrow. Sovereignty requirements are expanding beyond government and defence into regulated industries more broadly. Azure Local’s ability to operate across the connectivity spectrum gives it a structural advantage here.
The ecosystem will mature. More ISVs will certify their applications for Azure Local. More Azure services will be available locally. The gap between “Azure in the cloud” and “Azure in your data centre” will continue to narrow.
Reflections
When I started this blog, I wanted to explore the multicloud ecosystem from a practical, grounded perspective. The past two years have been a fascinating time to be doing that. The evolution of Azure Stack HCI into Azure Local has been one of the most significant infrastructure transformations I’ve witnessed in my career, and it’s happened at a pace that’s been challenging to keep up with even from the inside.
What’s most impressive to me is not any individual feature or announcement, but the coherence of the overall strategy. Every piece, from the Arc integration to the OEM partnership model to the sovereign cloud capabilities, fits together into a vision for how on-premises infrastructure should work in a cloud-first world. Not as a separate thing that happens to connect to the cloud, but as a genuine extension of the cloud to wherever you need it.
Whether you’re running a single node at a remote edge location or hundreds of servers in a sovereign data centre, the platform is designed to serve you. And with Dell AX providing the hardware foundation, the full stack from silicon to cloud is validated, supported, and continuously improving.
It’s been quite a ride. I’m looking forward to seeing where the next two years take us.