Even though Microsoft is offering VM hosting, that does not mean customers will be able to create custom compute and storage configurations, as they might with an IaaS provider like Rackspace, Hauger says.
Custom storage configurations are "something we absolutely do not offer with the Windows Azure platform, because we've made an architectural decision to have a uniform storage pool."
On the other hand, Azure customers don't have to worry about writing multi-tenancy capabilities into their applications. Hauger argues that building applications that are resilient, scalable and automated is, while not impossible in an IaaS cloud, quite difficult when "you're staring down the throat of a VM and you have to manage that yourself."
Even with VM Role, and a Server Application Virtualization option that will let developers transfer application images to Azure, Hauger does not recommend that customers "forklift a big, monolithic application from on-premise and move it over to Windows Azure."
VM Role could be used to move some "lightweight" HPC applications to the Azure cloud, Hauger says. If a customer needs large-scale data analysis, but only for a short amount of time, it makes sense to move that app to Azure temporarily and then take it back in-house, he says. Some customers are finding that purely Web-based applications, like Facebook games, also make sense for Azure, he says.
Microsoft officials are willing to admit that Azure's capabilities are not limitless.
For example, Microsoft CTO Barry Briggs says his own team used Azure last year to build a charity auction application, but kept credit card processing on-premise "because PCI compliance is a big deal."
"There are some things that will probably stay on-premise for a while and I suspect PCI compliance will be there, because customers want to take some time to understand what the capabilities and potentials of the [cloud] technology really are," Briggs says.
Although Microsoft is expanding Azure by offering VM hosting, it's important to note that the offer applies only to Windows Server 2008 R2. Microsoft clearly wouldn't offer Linux VMs and offering older versions of Windows Server would not fit the Microsoft strategy, either, MacDonald says.
Amazon's Elastic Compute Cloud, meanwhile, offers Windows Server 2003 and 2008, eight versions of Linux and OpenSolaris.