Just for fun, let's do a little educated speculation on Microsoft's "cloud os" initiative. It's not too hard to make some good guesses -- Microsoft's existing and unreleased products telegraph a lot about what they are likely assembling. For example, the semi-well-known "COOL" and Visual J++/WFC gave you most of what needed to know to imagine the real .Net platform.
There are lots of pieces out there -- certainly enough to comprise a pretty interesting cloud stack and application model.
Since Microsoft -- and platform vendors in general -- like to go all out, let's imagine this stack reaching from real hardware up through virtualized hardware up to application servers and then to client components and the end-user's browser or alternative on the other end.
Let's start in the middle of this stack and work our way out.
What would the "middle" look like? Well, what makes a hosted ASP.net account different from a cloud platform? Some answers: storage and bandwidth may not be elastic; clustering the app is neither automatic nor declarative, but requires programmatic and operational work; the database is typically a SQL Server instance (perhaps a mirrored failover cluster) with all of the usual capabilities and scaling constraints.
So imagine a hosted ASP.net account with a few changes that address these limitations.
First, swap in an alternative implementation of sessions, that supports clustering, proper caching, etc., with zero config. Add a lint-like tool to warn about code that isn't properly stateless. And an asynchronous worker service for any long-running, background, or scheduled tasks that could be "fudged" with threads or events in a controlled Windows Server environment, but won't work that way in the cloud.
Next, replace the datastore with something like ... SSDS, and a LINQ provider so that in many cases code won't need to be changed at all. The interesting thing about SSDS, of course, is that unlike other non-relational cloud datastores, Microsoft has said the roadmap will offer more relational capability (subject to constraints, no pun intended). So ASP.net apps that need real relational behavior might have an easier time moving to this new datastore.
So, without much new, we have a flavor of ASP.net that is more cloud-centric and less server-centric.
Now on the hardware and VM end of the stack, bear in mind also that -- to add value and sell the Server product, as well as to service enterprises which would like cloud architecture but need parts of the "cloud" to stay inside the firewall -- the whole enchilada is likely to be available as a service (or its own SKU) on Windows Server.
In fact, a number of Microsoft products related to modeling data centers, virtualization, and automated migration of services and machine images suggests that a key thrust of the "cloud os" might be that a customer can easily move services from individual servers up to a private cloud implementation and on to one (or more -- perhaps an opportunity for the hosting partners) public cloud data centers... provided they are coded to conform to the API.
ADO.Net Data Services (aka Astoria) already supports AtomPub, the format Microsoft is using or moving to for all of its Live services, so minimal wrappers (not to say minimal effort in the API design) could turn this into a platform API. A simple using directive brings in a File object and API that works with Skydrive instead of My Documents.
Last, look at the client end of things. Right now, we have ASP.net serving web pages, and we have web services for Silverlight clients. There is also a project (named "Volta", and which has just recently gone offline while a "new version" is in the works) aimed at dynamic tier splitting and retargeting apps in terms of the client runtime. Hmmm... Sounds like a critical part of the front end of the cloud os stack.
In order to provide a RIA experience via Silverlight (or even desktop experience for a cloud-os edition of office), promote the client os product by offering a best-of-breed experience on Windows clients, and at the same time offer a legitimate cross-platform web-browser-consumable app, a piece like Volta is critical, and makes complete sense.
The big question in my mind is timing -- how far along are they on the supportable, RTM version of this stuff. Whether this is relevant -- or even becomes a reality -- will depend on how fast they can get this out of beta.
It seems that when Microsoft is quite close to production with a platform they can grab enormous mindshare (recall the release of the .Net platform). If this is an alpha look, with no promised timeline, things are a lot more tenuous. If there is a 1.0 planned before mid 2009, this could make things interesting.