Windows Azure Tools – Failed to initialize the Development Storage service.
If you are first time running DevFabric and see the above error, there are 3 common possibilities.
1. You do not have MS SQL 2008 Express installed.
To install MS SQL 2008 Express http://www.microsoft.com/express/Database
2. You have MS SQL 2008 Express installed but not started.
To start the MS SQL 2008 Express service normally you can do, C:>net start MSSQL$SQLEXPRESS
3. You have MS SQL 2008 Server instead of Express edition.
Use DSinit Tool to change the instance for instance, C:\Program Files\Windows Azure SDK\v1.2\bin\devstore>DSInit /sqlInstance:.
The normal screen that you will see when runs the Azure Tool the first time.
Windows Azure Platform: http://www.microsoft.com/windowsazure/getstarted