Mary Jo Foley has posted some excerpts of a quick Q&A between herself and Julius Sinkevicius, Director of Product Management for Windows Server on her blog, excerpts which seem to indicate that Microsoft will be keeping Azure hosting to itself.

This may be a semantic problem, and how the system actually plays out once Azure comes out of beta remains to be seen, but at the moment this seems to be a bit of volte-face on Microsoft's part from their "Software+Services" mantra. Thus far, the company has been eager to point out that all its cloud-based offerings have been based off of Microsoft software which is also available for businesses to purchase and run internally. Part of the benefit, they have been telling us, is that you have the power to decide what runs where, and how and when to move applications back and forth from internal to external platforms.

The company still claims that applications developed for Azure will be able to run on traditional on-premises Microsoft platforms, but the reverse is not necessarily the case, and with the company declining to make Azure available as an internally deployable platform, you may begin to see the limitations of the "Software+Services" argument.

I've long held that the alleged security that many people feel comes from hosting software internally is largely an illusion, and it follows that the Microsoft line about keeping the power in your hands is chimerical as well. The biggest question has been, does Microsoft actually believe in their stated approach, or is it just a marketing message designed to bridge the gap between the software company that it is and the services company that it needs to become. This may be our answer.