Similarities and Differences 
 Similar to an instance of SQL Server on your premises, SQL Azure  exposes a tabular data stream (TDS) interface for Transact-SQL-based  database access. This allows your database applications to use SQL Azure  in the same way that they use SQL Server. Since SQL Azure is a service,  administration in SQL Azure is slightly different. 
Unlike administration for an on-premise instance of SQL Server, SQL  Azure abstracts the logical administration from the physical  administration; you continue to administer databases, logins, users, and  roles, but Microsoft administers and configures the physical hardware  such as hard drives, servers, and storage. This approach helps SQL Azure  provide a large-scale multi-tenant database service that offers  enterprise-class availability, scalability, security, and self-healing. 
Since Microsoft handles all of the physical administration, there are  some differences between SQL Azure and an on-premise instance of SQL  Server in terms of administration, provisioning, Transact-SQL support,  programming model, and features. For more information, see 
Guidelines and Limitations (SQL Azure Database). 
 
Although SQL Azure plays an active role in managing the physical  resources of the database, the DBA plays a very important role in  administering SQL Azure-based database applications. Using SQL Azure,  DBAs manage schema creation, statistics management, index tuning, query  optimization, and security administration (logins, users, roles, etc.).  For more information about security administration in SQL Azure, see 
Managing Logins and Users in SQL Azure. 
Database administration in SQL Azure differs most from SQL Server in  terms of physical administration. SQL Azure automatically replicates all  data to provide high availability. SQL Azure also manages load  balancing and, in case of a server failure, transparent fail-over to a  healthy machine hosting one of the backup copies of your database. 
To provide this level of physical administration, you cannot control  the physical resources of SQL Azure. For example, you cannot specify the  physical hard drive or file group where a database or index will  reside. Because the computer file system is not accessible and all data  is automatically replicated, SQL Server backup and restore commands are  not applicable to SQL Azure. The SQL Azure service still backs up all  databases; however they are not accessible to regular users. This is a  feature that may be offered in future. 
Starting with SQL Azure Service Update 4, SQL Azure allows you to  back up your database by copying it to a new database in SQL Azure. For  more information, see 
Copying Databases in SQL Azure. 
For more information on the available options to transfer data to SQL Azure, see 
Migrating Databases to SQL Azure.
 
When preparing an on-premises SQL Server deployment, it may be the  role of the DBA or IT department to prepare and configure the required  hardware and software. When using SQL Azure, these tasks are performed  by the SQL Azure provisioning process. 
You can begin provisioning your SQL Azure databases after you create a  Windows Azure Platform account. 
This account allows you to access all  the services, such as Windows Azure, AppFabric, and SQL Azure, and is  used to set up and manage your subscriptions. 
Each SQL Azure subscription is bound to one SQL Azure server within  one of the Microsoft data centers. Your SQL Azure server is an  abstraction that defines a grouping of databases. To enable  load-balancing and high availability, databases associated with your SQL  Azure server may reside on separate physical computers within the  Microsoft data center. 
For more information about provisioning, see 
SQL Azure Provisioning Model. 
 
 
Transact-SQL is a language that contains commands used to administer  instances of SQL Server including creating and managing all objects in  an instance of SQL Server, and inserting, retrieving, modifying, and  deleting all data in tables. Applications can communicate with an  instance of SQL Server by sending Transact-SQL statements to the server.  Microsoft SQL Azure Database supports a subset of Transact-SQL for SQL  Server. For more information about Transact-SQL support, see 
Transact-SQL Support (SQL Azure Database). 
 
SQL Azure does not support all of the features and data types found  in SQL Server. Analysis Services, Replication, and Service Broker are  not currently provided as services on the SQL Azure. You can connect  from on-premises Analysis Server to SQL Azure and SQL Azure can be used  either as a data source or destination. When this article is being  updated, the Customer Technology Preview of 
SQL Azure Reporting  is also available. Microsoft SQL Azure Reporting  is a cloud-based  reporting service built on SQL Azure, SQL Server, and SQL Server  Reporting Services technologies. You can publish, view, and manage  reports that display data from SQL Azure data sources.  
Because SQL Azure performs the physical administration, any  statements and options that attempt to directly manipulate physical  resources will be blocked, such as Resource Governor, file group  references, and some physical server DDL statements. It is also not  possible to set server options and SQL trace flags or use the SQL Server  Profiler or the Database Tuning Advisor utilities. 
 
The benefits of using SQL Azure include manageability, high  availability, scalability, a familiar development model, and a  relational data model.
 
SQL Azure offers the scale and functionality of an enterprise data  center without the administrative overhead that is associated with  on-premise instances of SQL Server. This self-managing capability  enables organizations to provision data services for applications  throughout the enterprise without adding to the support burden of the  central IT department or distracting technology-savvy employees from  their core tasks in order to maintain a departmental database  application. 
With SQL Azure, you can provision your data storage in minutes. This  reduces the initial costs of data services by enabling you to provision  only what you need. When your needs change, you can easily extend your  cloud-based data storage to meet those needs. 
 
SQL Azure is built on proven Windows Server and SQL Server  technologies, and is flexible enough to cope with any variations in  usage and load. The service replicates multiple redundant copies of your  data to multiple physical servers to maintain data availability and  business continuity. In the case of a hardware failure, SQL Azure  provides automatic failover to ensure availability for your application.  
 
A key advantage of SQL Azure is the ease with which you can scale  your solution. As data grows, databases need to either scale up or scale  out. Scale up always has a ceiling whereas scale out has no virtual  limits. A common scale out technique is data-partitioning. After  partitioning your data, the service scales as your data grows. A  pay-as-you-grow pricing model makes sure that you only pay for the  storage that you use, so that you can also scale down the service when  you do not need it. 
 
When developers create on-premise applications that use SQL Server,  they use client libraries like ADO.NET, ODBC that use the tabular data  stream (TDS) protocol to communicate between client and server. SQL  Azure provides the same TDS interface as SQL Server so that you can use  the same tools and libraries to build client applications for data that  is stored in SQL Azure. For more about TDS, see 
Network Protocols and TDS Endpoints. 
 
SQL Azure will seem very familiar to developers and administrators  because data is stored in SQL Azure just like it is stored in SQL  Server, by using using Transact-SQL. Conceptually similar to an  on-premise instance of SQL Server, a SQL Azure server is logical group  of databases that acts as an authorization boundary. 
Within each SQL Azure server, you can create multiple databases that  have tables, views, stored procedures, indices, and other familiar  database objects. This data model makes good use of your existing  relational database design and Transact-SQL programming skills, and  simplifies the process of migrating existing on-premise database  applications to SQL Azure. For more about Transact-SQL and its  relationship to SQL Azure, see 
Transact-SQL Support (SQL Azure Database). 
SQL Azure servers and databases are virtual objects that do not  correspond to physical servers and databases. By insulating you from the  physical implementation, SQL Azure enables you to spend time on your  database design and adding additional value to the business. 
The following table provides a high-level comparison between SQL  Azure and SQL Server. For the most up-to-date and detailed information,  see the following topics on MSDN:
Taken from : http://social.technet.microsoft.com/wiki/contents/articles/comparing-sql-server-with-sql-azure.aspx 
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