Pundits talking about how Windows 7 is all about Microsoft competing against Apple, recovering with Vista consumer adoption disaster, or getting people off of XP, are missing one other – extremely important – part of the Windows 7 story. Windows 7 and its server counterpart – Windows Server 2008 R2 – are actually the first real step in Microsoft’s Windows Cloud Story. Before Windows 7 Microsoft could offer some services (such as Exchange Online) from the cloud – but could not provide full enterprise directory, security and so on – now they can.

Microsoft has always called their SaaS plan Software + Services, emphasizing that they can enable rich Windows and application experience over the internet. The reality however has been that in most cases these have been limited to a few web-enabled (e.g. Outlook) or pure web (e.g. SharePoint) applications. Most Microsoft systems and their whole enterprise security model rely on Active Directory and intranet network connectivity – neither of which work should the directory be located in Microsoft’s datacenter.

Now Microsoft has actually quietly added a few key features enabling this scenario:

• Offline Domain Join – customers can now have add their computers to Active Directory without ever having them in the same network (by importing special security key they get from whoever is running their domain.)
• DirectAccess – end users can log into their domain and access any services (including even file servers) without having to VPN into the network and there is a way to automatically enforce their patch and antivirus level using Network Access Protection (NAP – the feature they added in Vista which now really shines when added to DirectAccess).
• Active Directory Management over Web Services – even administrative tools: both graphical and command-line – got revamped to work over web services instead of traditional direct connectivity.
• To say nothing about much improved Remote Desktop Services, application streaming, Virtual Desktop Infrastructure and so on. There’s definitely some pattern here!

With these technologies, Microsoft will actually be able to run your entire environment in their datacenter, yet let users securely connect to that environment from their own Windows machines.

This is a pretty important step in fighting the Web 2.0 approach of Google and the like which are suggesting that all your applications are going to be replaces with in-browser web counterparts like Google Apps. And obviously Microsoft’s approach has the potential of providing a much more familiar and evolutionary way of outsourcing your IT than radical “we’ll find everything on the web” way.

It is also fascinating to see that Microsoft is not yet positioning these technologies as hosting enablers. Their documentation lists them as advances for enterprise own administration. Yet, administrators find them quite hard to discover and set up. My guess is that this is because, as I mentioned above, these feature are not really for customers but are for hosters – most importantly Microsoft – and Microsoft is simply not ready yet to publicly announce their next generation services which make use of the features.

My gut feeling is that we will hear about them pretty soon. Time will tell.