We’re working on ways to provide free and low cost onramps for developers, and expect to make more announcements in 2011. Today, there are already multiple ways for developers to get onto Azure cost effectively:

Free Introductory Offer – provides a limited monthly quota of Azure resources at no cost, with standard rates applying above those thresholds: http://www.microsoft.com/windowsazure/offers/

MSDN Premium, Ultimate, and BizSpark Subscription Benefit – provides significantly higher free quotas of Azure resources to MSDN subscribers for several months: http://msdn.microsoft.com/en-us/subscriptions/ee461076.aspx

Cloud Essentials for Partners – provides free/low cost access to Azure resources to members of the Microsoft Partner Network. http://www.microsoftcloudpartner.com/

At PDC 2010 Microsoft announced the Extra Small Instance, which will be priced at $0.05 per compute hour in order to make the process of development, testing and trial easier. This will make it affordable for developers interested in running smaller applications on the platform. A beta of this role will be available before the end of 2010.

Please let us know if this addresses your needs for a more cost effective Azure offering.