Microsoft has officially released details about its Cloud operating system, Windows Azure. Microsoft sees this as the step forward to further enhance it’s products and provide a platform for developers to build applications to be cloud delivered. Windows 7 and Windows Server 2008 R2 will also introduce components that will help businesses break the current network and application boundaries .

The next version of Microsoft Office will add light-weight versions of Word, Excel, Powerpoint and OneNote.  This will let Microsoft compete with Google Apps, Zoho Office and other similar Web based applications, by encouraging users to continue to use the Office suite. This is a smart decision, because once business enterprises start using Saas based services it would be very difficult for Microsoft to lure customers back. The cost of a Microsoft Office license is becoming a real reason why small and medium enterprises are looking to open source and Saas based services.

Windows Azure will be part of the Azure Services Platform. This will provide a range of cloud based services including storage, computing, and networking infrastructure. This will be located inside Microsoft’s own datacenters. This is a new move for Microsoft. Traditionally Microsoft has left the hosting of it’s Saas based services like Exchange and Sharepoint to other providers.

Businesses will still need their own internal services, infrastructure and capabilities, but software and services like Exchange, Office and SQL will be located in the Cloud. Essential computing services like domain controllers and file/print services will still need to be internalised for the time being. I am sure that the virtual datacentre supporters are trying to develop virtual alliances that can be mirrored down to the local sites to provide onsite authentication, but we are not there yet.

Companies will not actually run Windows Azure, its purpose is to allow developers to design services and applications that can be leveraged in the various Cloud networks.

Microsoft sees Azure services as a way for organisations to move away from traditional technology models and the limitations they have. It will allow organisations to add capacity as required, and innovate quickly. Paying as you go will also allow organisations to reduce the initial capital outlays required for traditional infrastructure.

It will be interesting to see what Azure services will really offer and whether the service costs will really make people want to move towards the Microsoft offering. Microsoft, in the past, has made licensing complicated and expensive, why would they change now?