Microsoft started talking about "Windows Cloud" as early as last month, although it's now made things officially, err... official at its PDC. Windows Azure is detailed here.

Watch an on-demand Webcast of Microsoft chief technology officer Ray Ozzie's keynote speech at Microsoft's PDC 2008, where he introduced Windows Azure, the "Windows in the cloud" service foundation underlying the Azure Services Platform, Microsoft's end-to-end software-plus-services approach to computing. Los Angeles, Oct. 27, 2008
Watch in stand-alone player.

Ozzie described how this platform combines cloud-based developer capabilities with storage, computational and networking infrastructure services, all hosted on servers operating within Microsoft’s global datacenter network. This provides developers with the ability to deploy applications in the cloud or on-premises and enables experiences across a broad range of business and consumer scenarios. A limited community technology preview (CTP) of the Azure Services Platform was initially made available to developers in attendance at PDC2008, giving them a chance to try out its features and functions and plan for their own future development.

“Today marks a turning point for Microsoft and the development community,” Ozzie said. “We have introduced a game-changing set of technologies that will bring new opportunities to Web developers and business developers alike. The Azure Services Platform, built from the ground up to be consistent with Microsoft’s commitment to openness and interoperability, promises to transform the way businesses operate and how consumers access their information and experience the Web. Most important, it gives our customers the power of choice to deploy applications in cloud-based Internet services or through on-premises servers, or to combine them in any way that makes the most sense for the needs of their business.”