Microsoft's dance with cloud comuting is very puzzling.
The June 5th Wall Street Journal article discusses the friction between Steve Ballmer and Bill Gagtes over NetDocs, described by WSJ writer Bob Guth as " a promising effort to offer software programs such as word processing over the Internet." Sounding very similar to Google Docs, the project died because it would have eaten into Microsoft Office revenues.
Microsoft's plans to open up it's entire lineup of Internet services to developers under a "Cloud OS" moniker. Alternatively described as "cloud-centric" Brian Hall, general manager of Windows Live describes this effort as "A lot of the data, a lot of the apps, a lot of the interesting things are on the edge. They are on the PCs. They are on the Xboxes. They are on the phones."
The ongoing Microsoft/Yahoo dance which seems to be focused on search engines and ad revenue, not cloud computing at all.
If Microsoft is planning on participating in the next revolution in computing, it really needs to change it's box-centric view and get on with moving it's applications onto the network. Cloud computing is about reducing reliance on the user client, not increasing it!
You should also read Blaise Zerega's view on the matter under his Portfolio.com blog "Did Microsoft Let Cloud Computing Slip Away"