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While similar in name, Microsoft's Azure Stack and Azure Stack HCI products are substantially different product offerings designed for different use cases.
Azure Stack brings Azure cloud capabilities into the data center for organizations that want to build and run cloud applications on localized resources. Azure Stack HCI operates on the same Hyper-V-based, software-driven compute, storage and networking technologies but serves a fundamentally different purpose. This new Microsoft HCI offering is a hyper-converged infrastructure product that combines vendor-specific hardware with Windows Server 2019 Datacenter edition and management tools to provide a highly integrated and optimized computing platform for local VM workloads.
Azure Stack gives users a way to employ Azure VMs for Windows and Linux, Azure IoT and Event Hubs, Azure Marketplace, Docker containers, Azure Key Vault, Azure Resource Manager, Azure Web Apps and Functions, and Azure administrative tools locally. This functionality gives an organization the benefits of Azure cloud operation, while also satisfying regulatory requirements that require workloads to run in the data center.
Azure Stack HCI offers optional connections to an array of Azure cloud services, including Azure Site Recovery, Azure Monitor, Azure Backup, Azure Update Management, Azure File Sync and Azure Network Adapter. However, these workloads remain in the Azure cloud. Also, there is no way to convert this Microsoft HCI product into an Azure Stack deployment.
Windows Server Software-Defined products still exist
Azure Stack HCI evolved from Microsoft's Windows Server Software-Defined (WSSD) HCI offering. The WSSD program still exists, but the main difference on the software side is hardware in the WSSD program runs on the Windows Server 2016 OS.
WSSD HCI is similar to Azure Stack HCI with a foundation of vendor-specific hardware, the inclusion of Windows Server technologies -- Hyper-V, Storage Spaces Direct and software-defined networking -- and Windows Admin Center for systems management. Azure Stack HCI expands on WSSD through improvements to Windows Server 2019 and tighter integration with Azure services.
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