Azure is their cloud OS and runs on a special Windows server cluster in huge datacenters. (One can run Linux VMs on it, but that's just a byproduct) Azure and software as a service are their mid term future plans. Not for a reason Dave Cutler (73 years old!!), VMS and WinNT fame/chief architect has worked on Windows Azure and Hyper-V since 2008. He is undoubtly Microsoft's oldest and most important person - without him Windows (NT series, XBox, Azure) wouldn't exist: https://en.wikipedia.org/wiki/Dave_Cutler
Everything you've written in your comment is true, but I don't think it responds to anything I've said: it just looks like you're trying to show off your knowledge of NT.
No, it was (an extensive) answer to your comment. Azure is their mid term plan for the future. It's their cloud OS. Software as a service, pay per months/annual is their business model to grow. As long as you run your Linux on their Azure they are happy to have you on board. Though, running other OS as guest OS on HyperV is just a by-product of the capabilities of the Azure cloud.
Both in the case of Office 365 and that of Azure they are selling you their cashcow (office and windows), only in a software as service fashion.
Moreover, neither is opensource, unlike cloud offering based on Xen or kvm, which are (at least to some extent).
I fail to see how Sun fares worse in this comparison, if this was your point.
