Azure Virtual Desktop Goes Hybrid with Azure Arc
At Microsoft Ignite 2025 in November, Microsoft unveiled a significant expansion to Azure Virtual Desktop (AVD) that addresses one of the most common challenges enterprises face: modernizing virtual desktop infrastructure without replacing existing hardware or changing hypervisors. With Azure Virtual Desktop for hybrid environments now in limited preview, organizations can extend cloud-native desktop virtualization to their on-premises infrastructure through Azure Arc.
The Challenge of VDI Modernization
Many organizations struggle with the complexity and cost of modernizing their IT environments. Legacy VDI solutions often require significant capital expenditure in new infrastructure or disruptive changes to core software components like virtualization hypervisors. Additionally, some workloads must remain on-premises due to performance requirements, data residency regulations, or compliance constraints.
Azure Virtual Desktop originally launched in 2019 as a cloud-only service, followed two years ago by Azure Virtual Desktop for Azure Local, which provided an on-premises option running on Microsoft's Azure Local platform. However, this still left a gap for organizations running other hypervisors or wanting to leverage existing hardware investments.
Enter Azure Virtual Desktop for Hybrid Environments
The newly announced Azure Virtual Desktop for hybrid environments bridges this gap by bringing the power of cloud-native desktop virtualization to existing on-premises infrastructure. Through the integration of Azure Arc and Azure Virtual Desktop, organizations can now run virtual desktops and applications in their own datacenters while managing them through the Azure control plane.
Supported Platforms
The hybrid capability extends far beyond Azure Local to include:
- Microsoft Hyper-V
- Nutanix AHV
- VMware vSphere
- Physical Windows Servers
- Anywhere Arc-Enabled Servers can be deployed on-premises
This flexibility allows organizations to leverage their existing virtualization investments while gaining the benefits of Azure management and services.
How It Works
Virtual machines configured as AVD session hosts run on-premises and are connected to Azure through Arc-Enabled Servers. These VMs function as session hosts that connect directly to the Azure Virtual Desktop service running in the Microsoft Cloud. This architecture provides:
- Unified identity management through Microsoft Entra ID
- Centralized policy management via Azure Policy
- Consistent monitoring and security across cloud and on-premises environments
- Flexible VM provisioning through partner solutions
Unlike Azure Virtual Desktop for Azure Local, which provides an end-to-end Microsoft cloud-native solution including VM provisioning and management, the hybrid option allows organizations to use their preferred VM management tools or leverage partner solutions.
Partner Ecosystem Support
Microsoft announced preview support with key industry partners who are building integrations and services for hybrid AVD deployments:
- ControlUp - Real-time monitoring and analytics for optimized performance across cloud and on-premises desktops
- Login VSI - Automated testing with Login Enterprise and management with Hydra solution
- Nerdio - Extending Nerdio Manager to manage all virtual desktops through a single, automated platform
- Nutanix - Enabling AVD on Nutanix deployments ranging from hundreds to 100,000+ seats
These partnerships ensure customers can confidently adopt hybrid AVD with the tools and guidance needed for successful deployments.
Key Benefits
The hybrid approach delivers several compelling advantages:
- Maximize existing investments - Leverage current hardware and hypervisors without forced upgrades
- Meet compliance requirements - Keep sensitive workloads on-premises while using Azure management
- Provide migration flexibility - Create a clear path to cloud migration when business needs evolve
- Unified management - Manage both cloud and on-premises virtual desktops through a single control plane
- Consistent security - Apply Azure security policies and monitoring across your entire VDI estate
Getting Started
If you're interested in exploring Azure Virtual Desktop for hybrid environments, you can sign up through the preview interest form. Microsoft is working with customers and partners during this limited preview phase.
You can also reach out to your Microsoft account team for additional details, readiness assessments, and guidance through the preview enrollment process.
Other Azure Arc Announcements from Ignite 2025
Beyond the AVD hybrid announcement, Microsoft unveiled several other significant Azure Arc enhancements at Ignite that expand hybrid and multicloud management capabilities:
Multicloud Connector for GCP (Public Preview)
Azure Arc now extends multicloud support to Google Cloud Platform, joining existing AWS connectivity. This enables agentless inventory discovery of GCP resources, Arc onboarding for GCP VMs, and secure OIDC federation authentication without storing credentials.
Auto Agent Upgrades (Public Preview)
Connected Machine Agents now support automatic upgrades with flexible control through Azure Portal, CLI, or PowerShell. Built-in resilience includes rollback and retry mechanisms for failed upgrades.
OS Configuration Editor and Policy
A new visual authoring interface simplifies creating and applying guest configuration policies without writing code, enabling fleet-wide OS settings auditing and enforcement across Azure and Arc-enabled servers.
Windows Server Recovery Configuration Audit
Part of the Windows Resiliency initiative, Arc now supports recovery audits to validate Windows Recovery Environment readiness across Arc-enabled servers with compliance visibility in Azure portal dashboards.
Workload Identity for Arc-enabled Kubernetes (GA)
Now generally available, this feature enables federated identity integration connecting workloads to Microsoft Entra without static secrets, using token-based authentication for secure Azure resource access.
Azure Arc Site Manager (Public Preview Refresh)
Enhanced capabilities for hierarchical site organization, aggregated monitoring across distributed environments, and site-level configurations that can be reused across partner solutions.
Simplified Migration with Azure Migrate (Preview)
Native integration between Azure Migrate and Azure Arc enables comprehensive business case generation and full estate migration readiness assessments without additional on-premises deployments.
Azure Key Vault Secret Store Extension (GA)
Now generally available for Arc-enabled on-premises Kubernetes, this extension automatically fetches secrets from Azure Key Vault for offline access, helping large distributed deployments scale effectively.
These innovations reinforce Azure Arc's position as the most comprehensive platform for hybrid and multicloud management, helping enterprises stay agile, secure, and compliant across their diverse infrastructure landscape.
Conclusion
Azure Virtual Desktop for hybrid environments represents a pragmatic approach to VDI modernization. Rather than forcing organizations to choose between cloud or on-premises, Microsoft is meeting customers where they are—providing cloud management benefits while respecting existing infrastructure investments and operational requirements.
As hybrid and multicloud strategies become essential for modern enterprises, Azure Arc continues to evolve as the connective tissue that brings Azure services and management capabilities to any infrastructure. The AVD hybrid announcement is just one example of how Microsoft is committed to delivering flexible, secured, and scalable solutions for the real-world challenges organizations face.
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