Microsoft on Tuesday unveiled a business model for its forthcoming Windows Azure "cloud" operating system. In a departure from its previous practices, the company will allow customers to pay for Azure on a per-use basis.

Microsoft will charge only for the services and bandwidth a business consumes on Azure, as well as on SQL Azure and .Net Services. Software fees can be complex. Many vendors calculate license fees—whether for cloud-based or server-based products--based on the number of individual processors a customer has running their software.

At a basic level, Microsoft said it would charge $0.12 per computing hour on Azure and $0.15 per gigabyte of storage. Bandwidth is charged at $0.10 per gigabyte in and $0.15 per gigabyte out.

The software maker also said it would provide Azure customers with written guarantees regarding uptime and other service levels. Computing and connectivity is guaranteed at 99.95% uptime while storage services are guaranteed to be available 99.9% of the time.

To ensure Azure's uptime, Microsoft is employing what it calls the Windows Azure Fabric Controller technology. Azure Fabric is designed to balance workloads across servers, manage resources, and reroute work instantaneously if a server goes down, according to Microsoft.

Members of Microsoft's Partner Network will receive a 5% discount on Azure services at roll out. Microsoft Developer Network Premium members will get access to cloud-focused development and testing services.

Azure is Microsoft's platform for delivering software and services to customers over the Web. Ultimately, the software maker will use Azure as the base for cloud offerings such as Exchange Online and SharePoint Online. "Over time, we'll make more and more use of Azure's platform services, such as storage and compute," said Microsoft senior VP Chris Capossela, in an interview.

The company expects to introduce a final version of Azure at its Professional Developers Conference, slated to kick off Nov. 17 in Los Angeles.

"What's unique about the Windows Azure platform is that Microsoft manages the complexity, which allows partners to focus on what matters most for their business—building innovative services solutions and driving new revenue," said Bob Muglia, president of Microsoft's Server and Tools unit.

Azure is the latest sign that Microsoft is eyeing the Web as the primary delivery mechanism for software and services. On Monday, the company said it planned to make a version of Microsoft Office 2010 available to consumers over the Internet at no charge. It plans a similar offering for businesses.

Such moves allow the company to protect its flank from online forays by rival Google. The question is whether Microsoft can perform such maneuvers without cannibalizing sales of its pricey packaged software, from which it derives the bulk of its revenue.

With Google in the rearview mirror, Microsoft may have no choice but to look to the cloud.

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