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