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← Back to Windows Server & Hybrid Administration (AZ-800 )

Chapter 11 : Azure Virtual Machines

Windows Server & Hybrid Administration (AZ-800 ) Last Updated: Jun 27, 2026

What is a Virtual Machine (VM)?

A Virtual Machine (VM) is a software-based computer that runs inside a physical computer (host machine). It behaves like a real computer and has its own Operating System, CPU, Memory (RAM), Storage, and Network.

A VM uses virtualization technology, which allows multiple virtual machines to run on a single physical server while sharing the server's hardware resources.

Each Virtual Machine works independently, so a problem in one VM does not affect the other VMs running on the same host.

 

In simple words:
A Virtual Machine is a virtual computer that functions like a physical computer but runs inside another computer.

 

Components of a Virtual Machine

Every Virtual Machine consists of the following components:

  • Virtual CPU (vCPU) 
  • Virtual Memory (RAM) 
  • Virtual Hard Disk (OS Disk & Data Disk) 
  • Virtual Network Interface Card (NIC) 
  • Operating System (Windows/Linux) 

These virtual components work together to provide the same functionality as a physical computer.

 

What is virtualization?

Virtualization is the technology that allows multiple Virtual Machines to run on a single physical server.

Instead of purchasing separate physical servers for different applications, virtualization enables one physical server to host several independent virtual machines.

Each VM has:

  • Its own Operating System 
  • Its own Applications 
  • Its own Storage 
  • Its own Network Configuration 

Virtualization improves hardware utilization and reduces infrastructure costs.

 

Hypervisor

A Hypervisor is software that creates and manages Virtual Machines.

It allocates hardware resources such as CPU, RAM, Storage, and Networking to each VM.

The Hypervisor also isolates one VM from another to ensure security and stability.

Examples of Hypervisors:

  • Microsoft Hyper-V 
  • VMware ESXi 
  • Oracle VirtualBox 

 

What is an Azure Virtual Machine?

An Azure Virtual Machine (Azure VM) is an on-demand virtual server provided by Microsoft Azure.

Instead of purchasing physical hardware, users can create virtual servers in Azure within a few minutes and access them over the internet.

Azure manages the underlying physical infrastructure, while users manage the operating system, applications, and data inside the VM.

Azure Virtual Machines support both:

  • Windows Operating System 
  • Linux Operating System 

 

What is IaaS (Infrastructure as a Service)?

IaaS (Infrastructure as a Service) is a cloud computing service model in which a cloud provider delivers virtualized computing resources such as virtual machines, storage, networking, and other infrastructure over the internet.

Instead of purchasing and maintaining physical servers, organizations can rent these resources on demand and pay only for what they use.

In Microsoft Azure, Azure Virtual Machines (Azure VMs) are one of the most common examples of IaaS.

 

How Does IaaS Work?

In the IaaS model, the cloud provider is responsible for managing the physical infrastructure, while the customer is responsible for managing the virtual machine and everything inside it.

Cloud Provider (Microsoft Azure) Manages:

  • Physical Servers 
  • Data Centers 
  • Networking Infrastructure 
  • Storage Hardware 
  • Virtualization Platform (Hypervisor) 

Customer Management:

  • Operating System (Windows/Linux) 
  • Installed Applications 
  • User Accounts 
  • Security Configuration 
  • Data 
  • Updates and Patches (inside the VM) 

 

Why is an Azure VM an IaaS service?

Azure VM is considered an IaaS service because Microsoft manages the physical infrastructure while the customer manages the virtual machine.

Microsoft Azure Manages:

  • Physical Servers 
  • Storage Hardware 
  • Network Infrastructure 
  • Data Centers 
  • Virtualization Platform 

Customer Manages:

  • Operating System 
  • Applications  
  • Updates  
  • Security Settings 
  • User Accounts 
  • Data 

This shared responsibility allows organizations to focus on their applications without maintaining physical hardware.

 

Physical Server vs Virtual Machine

Physical ServerVirtual Machine
Physical hardwareSoftware-based computer
Requires dedicated hardwareRuns on shared physical server
Higher hardware costLower infrastructure cost
Difficult to scaleEasy to scale
Longer deployment timeCan be deployed within minutes
Hardware maintenance requiredAzure manages hardware

 

Advantages of Azure Virtual Machines

  • Quick deployment within minutes. 
  • Pay only for the resources you use. 
  • Easily increase or decrease CPU and RAM. 
  • Supports both Windows and Linux operating systems. 
  • Accessible securely from anywhere using the internet. 
  • High availability and disaster recovery support. 
  • Suitable for development, testing, production, and enterprise workloads. 

 

Enterprise Use Cases of Azure VMs

Azure Virtual Machines are widely used in organizations for various business requirements.

Common use cases include:

1. Hosting Business Applications

Organizations host ERP, CRM, HRMS, and other business applications on Azure VMs.

 

2. Domain Controllers

Windows Server Virtual Machines can be configured as:

  • Active Directory Domain Controllers 
  • DNS Servers 
  • DHCP Servers 

 

3. Web Server Hosting

Azure VMs can host:

  • IIS Websites 
  • Apache Web Servers 
  • Nginx Servers 

 

4. Database Servers

Organizations use Azure VMs for hosting:

  • Microsoft SQL Server 
  • MySQL 
  • PostgreSQL  
  • Oracle Database 

 

5. Development and Testing

Developers create temporary virtual machines for:

  • Software Development 
  • Application Testing 
  • Quality Assurance 
  • Lab Environments 

After testing, the VM can be deleted to reduce costs.

 

6. Backup and Disaster Recovery

Azure VMs help organizations recover quickly during hardware failures or disasters by restoring workloads from backups.

 

7. Remote Desktop Environment

Employees can securely connect to Windows Virtual Machines using Remote Desktop Protocol (RDP) and work from any location.

Benefits of Azure Virtual Machines

  •  
  • Reduces hardware investment. 
  • Provides scalability based on workload. 
  • Faster deployment than physical servers. 
  • Supports business continuity. 
  • Easy backup and recovery. 
  • High availability using Azure infrastructure. 
  • Suitable for hybrid cloud environments. 
  • Integrates with other Azure services.

 

11.2 Azure VM Architecture

What is Azure VM architecture?

Azure VM architecture refers to the complete set of Azure resources and components that work together to successfully create, deploy, and manage a Virtual Machine in Microsoft Azure.

A Virtual Machine cannot function independently in Azure. It requires supporting resources such as a Resource Group, Virtual Network, Subnet, Network Interface, IP Address, Storage Disks, and an Azure Region.

Each component has a specific role in ensuring the VM operates securely and efficiently.

Components of Azure VM Architecture

The main components of Azure VM Architecture are:

  • Resource Group 
  • Virtual Network (VNet) 
  • Subnet 
  • Network Interface Card (NIC) 
  • Public IP Address 
  • Private IP Address 
  • OS Disk 
  • Data Disk 
  • Region 
  • Availability Zone 

 

  • Resource Group (RG) : A Resource Group is a logical container that stores and manages related Azure resources such as Virtual Machines, VNets, Disks, and IP addresses. It makes resource management easier.
  • Virtual Network (VNet) : A Virtual Network (VNet) is a private network in Azure that allows Azure resources to communicate securely with each other, the internet, and on-premises networks.
  • Subnet : A Subnet is a smaller network created inside a Virtual Network. It helps organize resources, improve security, and manage IP addresses efficiently.
  • Network Interface Card (NIC) : A Network Interface Card (NIC) is a virtual network adapter that connects a Virtual Machine to a Virtual Network. Every Azure VM requires at least one NIC for network communication.
  • Public IP Address : A Public IP Address allows a Virtual Machine to communicate with the internet. It is mainly used for remote access through RDP (Windows) or SSH (Linux).
  • Private IP Address : A Private IP Address is assigned to a VM for communication within the Virtual Network. It is not accessible from the internet and is used for internal network communication.
  • OS Disk : An OS Disk is the primary disk that contains the operating system files required to boot and run the Virtual Machine. Every Azure VM must have one OS Disk.
  • Data Disk : A Data Disk is an additional storage disk attached to a Virtual Machine to store application data, user files, databases, and backups. A VM can have multiple Data Disks.
  • Azure Region : An Azure Region is a geographical location containing one or more Microsoft data centers where Azure resources are deployed. Choosing the nearest region improves performance and reduces latency.
  • Availability Zone : An Availability Zone is a physically separate data center within an Azure Region. It provides high availability by protecting applications from failures in a single data center.

 

11.3 VM Sizes & Pricing

What are Azure VM Sizes?

Azure Virtual Machine (VM) Sizes define the amount of computing resources allocated to a Virtual Machine. These resources include the number of Virtual CPUs (vCPUs), Memory (RAM), Storage capacity, and Network performance.

When creating a Virtual Machine in Azure, selecting the appropriate VM size is important because it directly affects the performance, scalability, and cost of the VM.

Microsoft Azure provides different VM sizes to meet various business and application requirements. Small applications require fewer resources, whereas enterprise applications require larger VM sizes with higher CPU and memory.

Choosing the correct VM size helps organizations optimize performance while controlling cloud costs.

 

Why are VM Sizes Important?

VM Sizes are important because every application has different hardware requirements.

For example:

  • A small website may require only 1 or 2 CPUs. 
  • A database server may require high memory. 
  • A scientific application may require high CPU performance. 

Selecting the correct VM size ensures:

  • Better application performance 
  • Efficient resource utilization 
  • Lower operational costs 
  • Easy scalability 

 

Types of Azure VM Sizes

Microsoft Azure provides several categories of virtual machine sizes. The most commonly used VM categories are:

  • General Purpose 
  • Compute Optimized 
  • Memory Optimized 

 

1. General Purpose Virtual Machines

General-purpose virtual machines provide a balanced combination of CPU and Memory resources.

These VMs are designed for applications that require moderate processing power and moderate memory.

General Purpose VMs are commonly used for:

  • Small Business Applications 
  • Web Servers 
  • Development and Testing 
  • Domain Controllers 
  • File Servers 
  • Medium-sized Databases 

Examples:

  • B-Series  
  • D-Series  

Advantages

  • Balanced CPU and RAM 
  • Cost-effective  
  • Suitable for everyday workloads 
  • Ideal for small and medium businesses 

 

2. Compute Optimized Virtual Machines

Compute Optimized Virtual Machines provide more CPU power compared to memory.

These VMs are designed for applications that perform heavy calculations and require high processing performance.

Common use cases include:

  • High-performance Web Servers 
  • Gaming Servers 
  • Batch Processing 
  • Scientific Computing 
  • Application Servers 
  • Video Encoding 

Example: F-Series 

Advantages

  • High processing speed 
  • Excellent CPU performance 
  • Faster execution of compute-intensive applications 
  • Suitable for workloads requiring continuous CPU usage 

 

3. Memory Optimized Virtual Machines

Memory Optimized Virtual Machines provide a larger amount of RAM than CPU resources.

These VMs are designed for applications that process large amounts of data in memory.

Common use cases include:

  • SQL Server 
  • SAP Applications 
  • Enterprise Databases 
  • Data Analytics 
  • Business Intelligence 
  • In-memory Applications 

Examples:

  • E-Series  
  • M-Series  

Advantages

  • Large memory capacity 
  • Better database performance 
  • Faster processing of large datasets 
  • Improved application responsiveness 

 

Azure VM Pricing

Azure Virtual Machine pricing depends on several factors.

The more resources allocated to a VM, the higher its cost.

Azure follows a flexible pricing model that allows organizations to pay only for the resources they consume.

 

Factors Affecting Azure VM Cost

1. CPU (vCPU)

The number of Virtual CPUs assigned to a VM directly affects its price.

Higher CPU resources provide better performance but increase the overall cost.

 

2. Memory (RAM)

Virtual Machines with more RAM are more expensive because they support memory-intensive workloads such as databases and analytics applications.

 

3. Storage

The size and type of storage attached to the VM also affect pricing.

Azure provides different storage options such as:

  • Standard HDD 
  • Standard SSD 
  • Premium SSD 

Premium SSD offers better performance but costs more than Standard HDD.

 

4. Azure Region

Pricing varies depending on the Azure Region where the VM is deployed.

Some regions have lower operational costs, while others may be more expensive.

Selecting the nearest region also improves application performance by reducing network latency.

 

5. Operating System

The operating system installed on the Virtual Machine also affects pricing.

  • Linux VMs generally cost less. 
  • Windows VMs cost more because Microsoft Windows licensing charges are included. 

 

6. Usage Duration

Azure charges for the amount of time a Virtual Machine is running.

If the VM is stopped and deallocated, compute charges stop, helping reduce costs.

Organizations often stop unused VMs during non-working hours to save money.

 

Pay-as-you-go Pricing Model

Azure uses the Pay-as-you-go pricing model.

In this model, customers pay only for the resources they actually use.

There is:

  • No upfront investment 
  • No need to purchase physical hardware 
  • No long-term commitment 

Organizations can create, resize, or delete Virtual Machines whenever required and are billed based on actual usage.

 

Benefits of Pay-as-you-go

  • No upfront hardware investment. 
  • Pay only for resources consumed. 
  • Easy to increase or decrease VM size. 
  • Reduces infrastructure costs. 
  • Suitable for temporary and seasonal workloads. 
  • Supports business growth without purchasing new servers. 

 

11.4 VM Storage & Disks

What is VM Storage?

VM Storage refers to the storage resources attached to an Azure Virtual Machine for storing the operating system, applications, user files, databases, and other data.

Every Azure VM requires at least one OS Disk, and additional Data Disks can be attached based on storage requirements.

 

Types of Azure VM Disks

Azure Virtual Machines mainly use two types of disks:

  • OS Disk 
  • Data Disk 

Azure stores these disks as Managed Disks, which are fully managed by Microsoft Azure.

 

OS Disk

What is an OS Disk?

An Operating System (OS) Disk is the primary disk that contains the operating system required to boot and run the Virtual Machine.

Examples:

  • Windows Server 2022 
  • Windows Server 2019 
  • Ubuntu Linux 
  • Red Hat Linux 

Every Azure Virtual Machine must have one OS Disk.

Uses of OS Disk

  • Stores the operating system 
  • Boots the Virtual Machine 
  • Stores system files and configuration files 

 

Data Disk

What is a Data Disk?

A Data Disk is an additional storage disk attached to a Virtual Machine to store application data, user files, databases, backups, and logs.

Unlike the OS Disk, it does not contain the operating system.

A Virtual Machine can have multiple Data Disks depending on its size.

Uses of Data Disk

  • Stores application data 
  • Stores databases 
  • Stores user files 
  • Stores backups and logs 

 

Managed Disk

What is a Managed Disk?

A Managed Disk is a virtual hard disk that is fully managed by Microsoft Azure.

Azure automatically handles storage management, availability, security, backup integration, and scalability, allowing administrators to focus on managing the Virtual Machine instead of the storage infrastructure.

Benefits of Managed Disks

  • Easy to manage 
  • High availability 
  • Better reliability 
  • Automatic scalability 
  • Improved security 

 

Types of Managed Disks

Azure provides different types of managed disks based on performance requirements.

1. Standard HDD

Standard HDD is a magnetic hard disk designed for basic workloads where high performance is not required.

Suitable for:

  • Backup storage 
  • File storage 
  • Development and testing environments 

 

2. Standard SSD

Standard SSD provides better performance than Standard HDD and is suitable for everyday business applications.

Suitable for:

  • Web servers 
  • Small databases 
  • Business applications 

 

3. Premium SSD

Premium SSD offers high performance and low latency. It is recommended for production workloads that require fast storage access.

Suitable for:

  • SQL Server 
  • Enterprise applications 
  • High-performance databases 
  • Mission-critical workloads 

 

OS Disk vs Data Disk

OS DiskData Disk
Contains the operating systemStores application and user data
Required for every VMOptional
Used to boot the VMCannot boot the VM
Usually one per VMMultiple disks can be attached

 

11.5 VM Security

What is VM Security?

VM Security refers to the methods and security features used to protect Azure Virtual Machines from unauthorized access, cyber threats, and data breaches. Azure provides multiple security features to secure VMs and their network communication.

 

Network Security Group (NSG)

What is a Network Security Group?

A Network Security Group (NSG) is a security feature in Azure that controls inbound and outbound network traffic to Virtual Machines using security rules.

It acts like a firewall by allowing or denying network traffic based on ports, protocols, and IP addresses.

Benefits of NSG

  • Controls network traffic. 
  • Blocks unauthorized access. 
  • Improves VM security. 
  • Protects Azure resources. 

 

Firewall Rules

What are Firewall Rules?

Firewall Rules define which network traffic is allowed or blocked for a Virtual Machine.

Administrators open only the required ports to reduce security risks.

Common Ports:

  • 22 – SSH (Linux) 
  • 3389 – RDP (Windows) 
  • 80 – HTTP 
  • 443 – HTTPS 

 

Just-in-Time (JIT) Access

What is Just-in-Time (JIT) Access?

Just-in-Time (JIT) Access is an Azure security feature that keeps management ports such as RDP (3389) and SSH (22) closed by default.

When an administrator needs to access the VM, they request temporary access for a specific period. After the approved time expires, the ports are automatically closed again.

Benefits of JIT Access

  • Reduces exposure to cyber attacks. 
  • Prevents unauthorized access. 
  • Improves overall VM security. 
  • Opens ports only when required. 

 

Backup

What is Azure Backup?

Azure Backup is a cloud-based service that creates secure backups of Virtual Machines and their data. It helps recover data in case of accidental deletion, hardware failure, ransomware attacks, or disasters.

Benefits of Azure Backup

  • Data protection. 
  • Quick recovery. 
  • Automated backups. 
  • Disaster recovery support. 

 

Patching

What is Patching?

Patching is the process of installing software updates, security fixes, and bug fixes on the operating system and applications running inside a Virtual Machine.

Regular patching helps protect the VM from vulnerabilities and improves system stability.

Benefits of Patching

  • Fixes security vulnerabilities. 
  • Improves system performance. 
  • Resolves software bugs. 
  • Keeps the operating system up to date. 

 

11.6 Backup & Availability

What is Backup & Availability?

Backup and Availability are important Azure features that help protect Virtual Machines from data loss, hardware failures, and unexpected downtime. They ensure that applications remain available and business operations continue without interruption.

 

Azure Backup

What is Azure Backup?

Azure Backup is a cloud-based backup service that securely stores copies of Virtual Machines and their data. It allows administrators to restore data if it is accidentally deleted, corrupted, or lost due to system failures.

Benefits of Azure Backup

  • Protects important data. 
  • Supports quick data recovery. 
  • Provides automated backup scheduling. 
  • Helps in disaster recovery. 

 

Snapshot

What is a Snapshot?

A Snapshot is a point-in-time copy of a Virtual Machine disk. It captures the current state of the disk and can be used to restore data or create new disks when required.

Benefits of Snapshots

  • Quick backup of disks. 
  • Easy data recovery. 
  • Useful before making major changes. 
  • Supports disaster recovery. 

 

Availability Set

What is an Availability Set?

An Availability Set is an Azure feature that distributes multiple Virtual Machines across different Fault Domains and Update Domains.

If one physical server fails or Azure performs maintenance, the other Virtual Machines remain available, minimizing downtime.

Benefits of Availability Set

  • Improves application availability. 
  • Reduces downtime during maintenance. 
  • Protects against hardware failures. 
  • Suitable for running multiple VMs. 

 

Availability Zone

What is an Availability Zone?

An Availability Zone is a physically separate data center within an Azure Region, each having its own power, cooling, and networking.

If one Availability Zone fails, Virtual Machines in another zone continue running, ensuring high availability.

Benefits of Availability Zone

  • High Availability. 
  • Fault Tolerance. 
  • Business Continuity. 
  • Better Disaster Recovery. 
  • Protection against data center failures. 

 

Availability Set vs Availability Zone

Availability SetAvailability Zone
Protects against server and maintenance failuresProtects against complete data center failures
VMs are placed within the same Azure RegionVMs are placed in different physical zones of the same region
Uses Fault Domains and Update DomainsUses physically separate data centers
Suitable for protecting against hardware failuresSuitable for maximum availability and disaster recovery