Microsoft Azure Cloud Services

In the beginning, there were physical machines. They were expensive and developers loaded them up with multiple applications to save costs. This caused no end of conflicts and unexpected bugs, yet effective machine utilization was still low. Developers struggled to make sure changes to one application didn’t break an unrelated application.

Virtual Machines

Since multiple VMs could be run on a single physical box, developers installed their applications in contained VMs, which reduced conflicts and improved utilization. The downside of this was dealing with shared memory and unpredictable performance. Furthermore, since provisioning had to be made for the largest loads, “scaling in” wouldn’t really save money.

The Cloud

Companies could rent the virtual machines they needed when they needed them. They could scale applications up and down on demand. You still needed to install and configure OS-level patches and updates, and you still had to contend with low-level networking.

Today, more businesses are increasingly evaluating PaaS (Platform as a Service) and serverless approaches to application development, moving beyond cloud-hosted VMs, removing the need to manage servers and scalability challenges, and increasing the speed of the iterative development process. In the Microsoft Cloud OS Partner Economics Research report (2014), it was found that companies can expect a 40% gross margin by using Microsoft Azure PaaS for app development services.