Ozzie has made his big announcement here at PDC 2008. Windows Azure is, he says, Windows for the cloud; a “web tier” offering that runs on Microsoft’s own datacenters. The basics: develop a web service in Visual Studio, deploy it to Azure. You can test and debug using a local Azure server. The client for Azure apps can be anything that can call a service – web app, Silverlight app, Windows app. Your Azure apps can call upon a set of other services many of which are already familiar. For example, the database is SQL Services, formerly called SQL Data Services. Workflow can be managed with Workflow Foundation (WF). For identity and access control, there will be an Active Directory connector, or other options (more on this later).

Note that Azure is a platform for hosted applications, written in .NET but eventually with an option for native code, rather than a VM running Windows in the manner of Amazon’s EC2 service. Thus, Azure has more in common with Google App Engine than with what Amazon is offering. Microsoft’s slides also show Sharepoint, Live Services, and Dynamics CRM as part of the Azure platform.

Microsoft will compete on things like the scope and ease of use of its platform. Integration with Visual Studio and Active Directory should make it relatively easy for Microsoft platform developers to start experimenting with enterprise apps hosted on Azure. Business model not spelt out yet, but the assumption is that Azure apps will scale seamlessly and on-demand.