Cloud services do have an advantage over desktop applications when it comes to their price. Many users like the Microsoft software, but are reluctant to pay for them. Elop is betting that this will create a new market for the company by offering premium paid products as an upgrade to basic free services. "We see that as a growth opportunity," Elop said.

The Microsoft executive meanwhile cautioned that a complete migration to cloud computing is a far way out, and that many hurdles have yet to be cleared. Concerns over privacy and security track records, for instance, could hold back cloud adoption. Rather than putting corporate data in a public cloud, firms could maintain control by building a private cloud instead. Microsoft has built private clouds for some large customers, including the U.S. government.