I wonder what would happen if Microsoft made Windows like Seti@Home, by linking up unused CPU cycles across the Internet. With say 10 million machines chugging and exchanging data, they'd wipe the floor with Google in terms of CPU power.
Except that unused cycles don't work in production settings. Pharma companies tried doing that for discovery programs back in the day and found that getting a cluster was much more effective. Using spare desktop cycles is great for low-level data collection, but you need to analyze that data and when you have deadlines you need much more control of availability and capacity
To some extent they are already in the cloud - they offer hosted services, Windows Live file hosting, hotmail, CRM Live; they have lots of hosted files so they must deal with CDNs.
So, why don't they avoid Amazon and do "hosted Windows servers" themselves?
I wonder if the "OS in the cloud" gets it as much as GMail did, you know, four and a half years ago...