At Microsoft’s Professional Developers Conference in Los Angeles on Monday, Microsoft Chief Software Architect Ray Ozzie and Corporate Vice President Amitabh Srivastava, two of the men who have been working stealthily for a couple of years on something only known as the “Windows Core,” now revealed it to be Windows Azure, Microsoft’s cloud computing platform. More than just trying to compete with Amazon’s cloud services, Microsoft says it wants to change the face of computing.

Microsoft sees the IT industry as organized into tiers, according to Ozzie. The first tier is the experience tier, the desktop computer, or mobile phone; it’s about the personal experience. Microsoft’s coverage of this first tier is represented currently by Windows Vista and Windows Mobile. The second tier is the enterprise tier, “Back-end systems, infrastructure, and our business solutions.” Windows Server is Microsoft’s spearhead into this terrain.

The third tier, as envisioned by Microsoft, is the one that’s now all the rage: The web tier, which is comprised of “externally-facing systems serving your customers, your prospects, potentially everyone in the world,” as Ozzie describes it. “The scale of this third tier is the size of the Web, and this tier requires computation, storage, networking, and a broad set of high-level services designed explicitly for scale with what appears to be infinite capacity available on-demand anywhere across the globe.”

The idea here is to develop applications which run upon a scalable system of servers run by Microsoft. One could design an app requiring a fraction of a server, or many working in tandem. Thus, it could cater to the needs of a personal customer, or supplant the entire data infrastructure of a large corporation, all for the fraction of the cost. This is certainly very attractive to enterprise customers looking to cut costs, and the very turbulence of the economy today may serve as the catalyst to making this technology the way of the future.

Given the prospect, this is a make-or-break situation for Microsoft, considering that while they were only putting what is now Azure into concept, Amazon was already putting it into application, with their software-as-a-service platform called EC2, which is continuing to expand.

Far from showing envy, Ozzie acknowledged Amazon’s pioneering efforts. “I'd like to tip my hat to Jeff Bezos and Amazon for their innovation,” he said. “And for the fact that, across the industry, all of us are going to be standing on their shoulders as we establish the base-level architectural models and business models that we'll all learn from and grow.”

Microsoft still has a long way to go if they want to realize this, however. Azure is currently just a platform for developers to tinker with and try out, and the first services will come out probably in 2009. It will be about five to ten years before the service comes in to its own commercially and its full impact is felt.