"It's not a matter of one is better than the other; they accomplish different things," O'Brien says. "But I think what you'll see happen in the marketplace is a convergence of those two, where infrastructure-as-a-service providers like Amazon will move up the stack toward platform-as-a-service. You'll also see PaaS providers like Microsoft provide some of that infrastructure-like capability, just so we can handle those migration scenarios much easier, and the lines will get blurred."

In his speech at the Cloud Leadership Forum, O'Brien said public cloud services are generally not providing as much customization as customers want, but the cloud model is gaining popularity both among users who want to sidestep their companies' IT departments, and from small businesses that want to get out of the IT business.

Many small businesses "don't want to be in the IT business," O'Brien said. "Private cloud is not in their vocabulary. They want to run their businesses on PCs and mobile phones and get out of the IT business entirely."

Private clouds simply don't offer the same economies of scale as public clouds do, he said, claiming that per-server TCO in a 100,000-server data center is less than half the per-server TCO in a 1,000-server data center.

Microsoft's goal in the cloud is to offer customers the same functionality they would expect if they install the software themselves, he said.