Last week Microsoft announced what can arguably be called Windows Azure 2.0 (Although Microsoft has refrained from using that term. )
This diagram from the MSDN Library summarizes the new structure of Windows Azure (for a larger view and more details see this MSDN entry.
In addition to extending Windows Azure’s reach into the pure IaaS dimension they have also announced another, higher level, PaaS platform, Windows Azure Web Sites.
Windows Azure Web Sites are quick easy to deploy two tier web sites backed by a SQL Server or MySQL database creatable and configurable in seconds instead of minutes. They achieve his feat by allocating space for your site in a pool of Shared Virtual machines that are already warmed up and ready to go. When your traffic increases or you want to run in a dedicated VM then you have the option to upgrade to a Reserved (dedicated) VM to host your web site. Although currently in preview it is expected that up to 10 web sites can be created and, at the low volume/shared level it is expected to be free. This is an outstanding options, especially for startups. It competes directly with other products like Google AppEngine.
Of course there are still the previous PaaS services of Windows Azure Compute (rebranded as Cloud Services), Windows Azure Storage and SQL Azure (rebranded as SQL Databases). These services can be used to develop the familiar Windows Azure PaaS applications that we have been able to construct for the past three years.
And old friends like Service Bus, with some enhancements, are still there as well, however the Access Control Service had been incorporated as a feature of the new Windows Azure Active Directory.
When it comes to IaaS you will hear a lot about how Windows Azure now supports persistent VMs that can be updated and persisted to Windows Azure blob storage and booted from there. This will allow the forklift migration of many existing on-premise applications to Windows Azure. Not that that is a great idea since most applications should have some change made to run effectively in the cloud, however, it is useful as an on-ramp to more cloud-optimized application architectures.
For those of you who want more look at the the session recordings from TechEd Learn Windows Azure.