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Microsoft released a beta of Windows Server AppFabric that "makes it easier to build, scale and manage Web and composite applications that run on IIS".

MS has also said that you can deploy AppFabric on your own servers, on a 3rd party host, and on Windows Azure.

So far we haven't done any Azure development mostly because the API differs from ASP.NET and you can only deploy your app to the cloud (and not on your own servers).

So if I use the AppFabric API, will that let me create apps that I can deploy in house, at a 3rd party hoster or on the cloud with the same API? Will it be a 'first class citizen' in all of these?

Where does this leave the Azure API - is AppFabric a replacement? What about Azure SQL?

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AppFabric offers is what was beforehand codenamed "Velocity". 

Velocity was the first name for Microsoft's response to MemCached, with the advantage of being composed explicitly for Windows (with x64 similarity), and furthermore having better ASP.NET joining. 

Microsoft has packaged this with something for "overseeing programming worked with Windows Workflow Foundation and Windows Communication Foundation". (A venture already codenamed Dublin.) 

Those two ventures (Velocity and Dublin) have now been assembled and are being sold under the title AppFabric.

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