Microsoft Launches Windows Azure

Microsoft on Monday announced a version of Windows that runs over the Internet from inside Microsoft's own data centers.

Dubbed Windows Azure, it's less a replacement for the operating system that runs on one's own PC than it is an alternative for developers to write programs that live inside Microsoft's data centers as opposed to on a business's own servers.

"It's a transformation of our software and a transformation of our strategy," said Ray Ozzie, a computing industry pioneer who now serves as Microsoft's Chief Software Architect.

Microsoft first outlined a shift to "Live Services" at an event in San Francisco in 2005. The company has released a few things piecemeal, such as Live Mesh, but Monday's announcement marked the first real discussion of how Microsoft's disparate Internet strategies fit together.

The announcements come at the start of Microsoft's Professional Developer Conference here. On Tuesday, Microsoft plans to go into more detail on Windows 7, the successor to Windows Vista, due out by next January.

With the launch of Azure, Microsoft will find itself in competition with other providers of Internet storage and computing services including Amazon, Salesforce.com and Rackspace.

Ozzie praised Amazon founder Jeff Bezos for innovating the hosted computing model. Amazon "established a base level design pattern, architecture models and business models that we'll all learn from," he said.

Microsoft said that it is making Windows Azure in preview form to developers, with a limited subset of the features that Microsoft plans to have in the product before its final release.

The software maker didn't go into too many details on how it will charge for Azure, saying it will be free during the preview period. Final pricing, "will be competitive with the marketplace," Ozzie said

Microsoft itself plans to offer businesses the option of running over the Internet the kinds of software that has traditionally run on a company's own servers. Microsoft already sells its Exchange corporate e-mail software in this way, but that is just the beginning, said Microsoft vice president Dave Thompson.

"All our enterprise software will be delivered as an online service as an option," Thompson said.

By Ina Fried. CNET News' Elinor Mills contributed to this report