Amazon, Rackspace, Google, etc. don't own the entire stack from run time to developer tools to cloud hosting and that gives Microsoft a unique advantage. No, Azure won't be the best cloud solution. No, it won't be the cheapest solution. What it will be is just enough goodness to be like crack to millions of Microsoft developers. It won't be worth their time to figure out how to get running in any other cloud provider when Visual Studio has a "Deploy to cloud" button available.
Microsoft will offer on-premise versions of Azure and some larger customers will adopt it but economies of scale will soon see 3rd party web hosting companies struggling for business. This is were the extra revenue for growth will come from. Microsoft will be making less on license sales and SPLA contracts in favor of locking in hosting revenue.