I think this is an (XBox) 360 turn of events. Although the idea is good, it's too small a niche to make a dent in the 'private-cloud' space. I think they haven't figured out how to package WinAzure aside from custom picked hardware.
WinAzure as a whole is (mostly) filled with hot air, and the original SQL Azure concept of Atom style queries with LINQ got replaced with full SQL queries that scale poorly in practice.
Compare these to the modular EC2 where private clouds can be easily transported from OS to OS and you clearly see that the Softies are way behind the curve in this technology in particular.
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