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In Azure, there are 2 options available to create virtual machines. A. normal VM B. Classic VM

Does anybody know what is the difference between both options? When do we use one over others?

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Virtual Machine(normal) is the Version 2 which includes changes in Azure Resource Manager(ARM) capabilities. It is an improvised version of the Version 1, that is, Classic VM.  

You can refer to this article: click here

It is suggested that you use the new version, which is Normal VM instead of classic.

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