“Windows Azure” is a terrible name but you need to be aware of it anyway. Windows Azure is a breathtakingly ambitious platform outlined by Microsoft at last week’s Professional Developer Conference, another attempt by Microsoft to position itself to profit from a paradigm shift that will be just as important as the move to the Internet in the 90s.

Yesterday I used word processing as an easy example to imagine what it would be like if you had universal access to your files with the ability to open and edit them from any computer. Of course, it’s just as easy to imagine having easy access from anywhere to your Excel spreadsheets and Powerpoint presentations, with the programs running in a browser if you don’t have a copy installed on the computer nearby.

Okay, now stretch a little bit. Imagine that you could have something like the same experience on your phone – Windows Mobile can sync folders using Live Mesh and it runs little tiny versions of Word and Excel. Photos can be moved around from computer to computer and/or stored online, too, so you might not be surprised by this anecdote from someone who tried using Live Mesh on his phone to sync the folder where the phone stores pictures. There were the pictures on his computer a few minutes later with no muss, no fuss, no action required at all. The camera on the phone looks a lot more usable all of a sudden!

But now let’s take a big step. Windows Azure is a platform that will allow you to run programs that are identical to programs installed on your computer but which are actually running from Microsoft’s online servers. Microsoft’s goal is to have all of its programs run from Microsoft’s data centers in such a way that you cannot tell the difference between a program hosted online and a program on your computer. The developer tools will allow all the other software vendors to do the same thing.

Some of you already have experience with that. Businesses running on Small Business Server use Outlook to connect to mailboxes stored in Exchange Server. At the office, people open Outlook to do their work; away from the office, they might use Outlook on their notebook computer, or they might check their mail or calendar on their Windows Mobile phone, or they might use Outlook Web Access to display their Outlook folders in a web browser. Outlook Web Access is already significantly improved in Exchange 2007 so it more closely resembles Outlook, and it only takes a small leap of faith to imagine the experience being identical to using the full program.

The Azure framework is intended to give developers the ability to present their programs to you over your Internet connection so that virtually all the hard work is done by the online servers. Microsoft or Google or Amazon have responsibility for holding the data and backing it up; when a program is updated, the updates are applied at the source instead of requiring you to take steps to install updates on each of your computers.

I’ll be writing more about Live Framework, the unified underpinning of the various Windows Live services as they become increasingly integrated, and Microsoft Online Services, which will introduce hosted online Exchange mailboxes to many of my clients. They’re early signs of this movement to online services that will change your life, whether you’re ready or not. There are many miles and many competitors and the future is not assured for Microsoft, but make no mistake – the company has staked its future on this ambitious transformation.

Here are some more early comments on Windows Azure: Dan Farber on “Microsoft’s Manhattan Project“; Robert Scoble says not to underestimate Microsoft’s ability to turn a corner; CBS News on the Azure launch; and Joe Wilcox on the significance of the project:

“I simply cannot overstate how enormous an undertaking is Azure. Microsoft plans to support cloud services in every product. Azure is hugely ambitious and will transform Microsoft, whether or not the vision stated on Monday makes it to market. As such, Azure is enormously risky and its success as envisioned is uncertain.”

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