Now Microsoft needs to play catch-up. It's Azure platform has been lagging behind and with this announcement from VMForce, it has a lot of ground to make up. One advantage Microsoft has always held is it's IDE and it's ability to deploy to all it's platforms (mobile, desktop, etc...). The IDE doesn't allow for deployment to it's cloud with a simple push. So, that's the first thing MS has to do:
1) Allow for deployment at the push of a button of .net applications from Visual Studio into Azure environment.
2) Use real C# code and not a reduced subset on Azure
3) Release MS Office and CRM on Azure
4) Everything on Azure automatically works on mobile devices (including the iPad)
Although VMForce is not yet available, Microsoft must be able to offer these four things to combat it when it does. This time, the vaporware promises that Microsoft will someday have it are not gonna cut it. Force.com and VMWare have too much momentum already.