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Analysis / Cloud

Dedicated Servers Versus Azure Virtual Machines: How Does Azure Fare In The IaaS Market?

Microsoft Azure

According to a survey conducted by RightScale, 85% of organisations, big and small, have a multi-cloud strategy. More than 60% of Fortune 500 companies use at least three Microsoft’s cloud technologies. This means that we can finally lay the IaaS versus on-premises debate to rest. This doesn’t mean that on-premises infrastructure is dead, this just means that the cloud gets the lion’s share of a company’s budget when it comes to spending on software, platforms, and infrastructure. When it comes to infrastructure as a service, you can choose between renting dedicated machines or building virtual machines. Let’s quickly jump into the basics before we get into a comparison of Azure virtual machines and dedicated servers.

Infrastructure-As-A-Service (IaaS)

As the name implies, IaaS is you renting someone else’s infrastructure for your use. Amazon, Microsoft, Google, and a number of other organisations provide this service. You tap into the machines present at their datacentres for hosting your website, applications, and/or database, and you pay for the use of these resources. All you need is a stable and fast internet connection, and the devices present at your location connect with the devices present at their datacentres. You need to manage your use, install and manage software, and constantly monitor your usage requirements so you only spend on what you need and can upscale and downscale as needed.

Dedicated Servers Vs Virtual Machines

When you go for Azure virtual machines, you configure the size and performance of the virtual machine, and you pay accordingly. The machine you create does have an IP address, a storage capacity that you set up, an operating system that you determine, but it is not a physical, dedicated server. It is a collective representative of the multiple resources present at Microsoft’s datacentre nearest to your location. You can create a dedicated MySQL server through Azure virtual machines, but that will not by a dedicated physical server, it would still be a virtual machine.

Renting a dedicated server on a monthly basis is the more traditional way of using IaaS. When you rent a dedicated server, you are connecting your machines to a particular server located in a remote datacentre. You can rent one or more servers based on your requirements, or you can upgrade or downgrade a server, but your choices are confined to the servers present at the datacentre of your service provider. And this bring us to our first point of comparison – customisation.


If you are using a hosting service to buy/rent a dedicated server, you will get a list of servers with their specs listed out to choose from. If they have Intel Core i5 760, Dual Xeon E5-2620, and Xeon E3-1230, then those are your three options to choose from. Each of these options will have its own memory, HDD, bandwidth, operation system, and monthly charges. You cannot go for a custom-built system unless you are willing to dole out some extra cash. Some of the bigger hosting service providers will have a number of options for you to choose from, but again, you will have to choose something that’s closest to your dream server – an exact match will not be likely. A virtual machine, on the other hand, can be customised.


With dedicated servers, the price depends on the type of machine you are buying along with the type of services and support you want to receive. The price can range anywhere between a few dollars per month to a few thousand dollars per month depending on the package you choose. Since I am writing this blog post for Business Computing World, I will go ahead and assume that most of the readers are entrepreneurs/business executives and are looking for more than just web hosting.

A decent server, that can handle your database, website, and other software will cost you upwards of $200 per month, and if your website gets visitors in the millions, $2000 per month would be your baseline. You can upgrade and downgrade any time depending on the availability of the server and usually pay on a monthly basis. With Azure Virtual machines, you pay as you go and are charged by the hour. The type of virtual machines you create do have an impact on the pricing, but all things considered, even the most expensive Azure virtual machine is going to cost you $0.133 per hour (at the time this blog post is being written), which makes it less than $100 per month.

Speed & Performance

This is one area where dedicated servers are at an advantage. When using virtual machines, you are sharing the hardware resources with other user, i.e. other customers of your service provider. With dedicated servers, you are not sharing the hardware resources with anyone, and that’s why, in the dedicated vs VPS debate, dedicated servers will always win points for better performance.

However, in my previous blog post about the future of Microsoft Azure, I mentioned how this technology relies on datacentres, and how Microsoft is investing in increasing the number of their datacentres and bringing in better resources such as super computers into play. This means that they realise that they’ve got dedicated servers beat in terms of pricing, and they are planning to do the same in terms of performance.

So how big of a difference is there in terms of speed and performance? It depends on a number of factors such as the software you are using, the frequency of usage, the type of usage, the number of users, your distance from Microsoft’s closest datacentre and more. However, unless we are talking millions of users per month, there may not be a noticeable difference. This may also be the reason why Fortune 500 companies have increasingly started using Azure, but haven’t switched to it completely and use a hybrid strategy where they may have their own servers, dedicated servers, along with a number of virtual machines dedicated to different processes and operations.


When it comes to data security, dedicated servers and virtual machines offer the same level of security since they are both part of infrastructure as a service. In IaaS, you, as the user, are responsible for application level controls, identity and access management, client and end-point protection, and data classification and accountability. The service provider is responsible for the physical security of the server.

In case of virtual machines, the host is responsible for the physical security of all the machines present at their datacentres. Most people think of their on-premises servers as more secure than those hosted off-site, but that security comes at an additional price that comes straight out of your annual budget. If you follow information security best practices and train your employees in using the cloud platform responsibly, you will have the same level of security without having to spend thousands of additional dollars per month.

In conclusion, dedicated servers do have their advantages and uses, but Azure Virtual machines are the future of the IaaS industry.

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Ehtisham is a writer, editor, and digital marketing professional working in the IT training industry. Passionate about how IT Training is delivered, consumed, and implemented, he serves as a content strategist for QuickStart, a Cognitive Learning Marketplace place serving the IT Community with core objective in delivering high impact personalized learning.