Windows Azure, being a Platform as a Service (PaaS), abstracts away the OS, storage, networking and shares massive pools of physical resources across virtual instances of applications running on the Windows Azure infrastructure.
The Windows Azure platform defines and enforces policies so that applications running on a virtualized infrastructure will play nicely with each other. Awareness of these resource policies is important for assessing capacity for successful operations and also for predicting the operational expenses for planning purposes.
In his blog Hanu Kommalapati discusses the factors that govern Windows Azure resource allocation and it’s pricing model. These factors include: network bandwidth, CPU cores, memory and local storage allocation.
These factors are also baked into Windows Azure pricing tools such as the the Windows Azure TCO calculator.