@vesuvius: I left out the Azure strategy but agree with you on what you just stated. I think companies are really getting tired of paying for IT maintenance on all the servers and backups. Azure does the upgrades and backups for you. The heavy activity is in cloud services. Even personally I think we are getting more comfortable with the cloud and keeping our digital valuables backed up there.
No one I have worked for in the last few years would ever relinquish their entire infrastructure to the cloud but would do in parts. For example, how many companies would like all their financial information kept in Redmond or around the world? All the bonus information of the executives, and salary information of everyone in the company. That simply is not going to happen!
The biggest issue that Ballmer has is infrastructure i.e. broadband. How many companies and home users in the US have internet connections bigger than 20MB, something essential to Azure's success?
Broadband infrastructure here in the UK and across Europe is still pretty poor, so Azure may exist, but 60% - 80% of people are still using infrastructure that is slightly better than 56/KBs dialup to send data to the cloud, and as more services like Netflix, TV and Games go online, bandwidth is an issue.
This is not to say this will always be an issue, but right now, uptake of Windows 8 with the SaaS vision will be tardigrade. Microsoft will need to be patient, as Apple have won the tablet and phone market by going further than Microsoft have, and peoples brand loyalty to Apple is like Heinz beans, Coke, or even Andrex toilet tissue. Just as I was seeing a major number of projects move to WPF, Microsoft sent negative messages out. Look at Windows 8 now, clearly 4-6 years away (two releases) from rivalling any of the competition.
People need to interpret Ballmer's letter as long term, because if you think there will be a million Windows 8 apps by next Christmas (2013) that are qualitatively comparable to anything Apple or Android have, then you will be disappointed.