Windows® Azure is a cloud services operating system that serves as the development, service hosting and service management environment for the Azure Services Platform. Windows Azure provides developers with on-demand compute and storage to host, scale, and manage Web applications on the Internet through Microsoft® data centers.

To build these applications and services, developers can use their existing Microsoft® Visual Studio® 2008 expertise. In addition, Windows Azure supports popular standards and protocols including SOAP, REST, and XML. Windows Azure is an open platform that will support both Microsoft and non-Microsoft languages and environments.

Use Windows Azure to:

* Add Web service capabilities to existing packaged applications.
* Build, modify, and distribute applications to the Web with minimal on-premises resources.
* Perform services (large-volume storage, batch processing, intense or large-volume computations, etc.) off premises.
* Create, test, debug, and distribute Web services quickly and inexpensively.
* Reduce costs of building and extending on-premises resources.
* Reduce the effort and costs of IT management.

In his keynote speech at PDC, Ray Ozzie gave some background to Azure. He started by noting that we're in the early days of the services revolution and then sung some lines from the now familiar Microsoft refrain of software + services. He mentioned the recent online stories that cloud computing may be over-rated (Larry Ellison and others). In response, he said that there is a trend of "the externalization of IT", and that rich forms of customer interaction are evolving - community interaction, wikis, blogs, etc. "The web has become a key demand generation mechanism". Further, Ozzie said that "a company's web presence has become critical to a company's overall business".

He talked about a company's web-facing challenges - power failures, cable cuts, earthquakes, and so on. He said that having more than one data center is required by companies, but this is difficult to do in-house. You may need to have data centers around the world, to ensure there are no latency issues etc. Excess capacity is required. And then you'd have political issues, tax issues, and other challenges. So going back to the issue of whether cloud computing is different than the old days of IT, Ozzie said that yes there is a "material difference".

Ozzie said that a few years ago Microsoft did an analysis of their web-facing systems - MSDN, MSN, and others. "Each one had grown organically on their own", but they also had common expertise - such as keeping software up to date, ensuring demand could be scaled in holiday seasons etc.

High scale internet infrastructure is a new tier of computing, said Ozzie. The first tier was the PC, the second the enterprise. The third tier is the web tier - externally facing systems (computation, storage, networking, "what appears to be infinite capacity"). So a few years ago Microsoft set out to create a platform for that third tier. A few months after they started their planning, Amazon released EC2. Ray Ozzie said that he "tips my hat" to Jeff Bezos and the Amazon team for what they've achieved.

Azure is designed to be Microsoft's cloud OS solution - their new foundation for web-based services. As PDC progresses, more will be revealed about this new product.

UPDATE: Our analysis: Microsoft Azure Aims to Re-define the OS