But there are shortcomings in the platform-as-a-service model as well, O'Brien acknowledges. The biggest problem with PaaS may be difficulty migrating existing applications from the internal data center to the cloud.

"Platform-as-a-service has a different set of tradeoffs," O'Brien says. "All of that stuff is completely abstracted away, it's a friction-free development, you basically code up an application, you hit deploy and it'll go run on the platform that's supplied by those runtimes. So in our case its PHP, C Sharp, in the case of it's Python and Java." While building new applications is easy, and removes the need for owning internal hardware and software, other than a Web browser, "part of the challenge there is it's not necessarily optimal for migrating existing applications."

Microsoft has already announced that "at some point [in the next 12 months] we will be offering the ability to provision a bare-metal VM, and run your application on that," O'Brien says.

While Amazon provides a variety of Windows and Linux virtual machine images through EC2, the company's Web Services business offers a variety of other tools that might be useful to developers, including databases, storage services and load balancing.

O'Brien predicts that just as Microsoft moves into IaaS, Amazon will build a PaaS offering that more closely resembles Azure than anything Amazon offers today. Amazon's public relations department could not be reached for comment Friday.