Microsoft’s chief architect Ray Ozzie has figured out that cloud margins aren’t gonna be the same as the margins derived from on-premises software. “The margins on services are not like the margins on software so [cloud computing] will increase our profit and it will increase our revenue, but you won’t have that margin,” he’s quoted as saying at the Churchill Club last week.

“The margins at the low level, at the Azure level, are going to be lower than the top level, where you’re delivering a solution or something like Exchange. You’re pricing that solution around a business value more than cost so the margins are still very, very good.”

• Microsoft's Ray Ozzie Thinks It's Still Early Days for Cloud Computing
• Ray Ozzie: Microsoft and Yahoo! Would Not Just Be Smashed Together
• Ray Ozzie: Who Can Keep Microsoft From "Growing Old Inside"?
• Microsoft Brings Lotus Notes Founder Ray Ozzie On Board As CTO
• SaaS Becomes 'Software Plus Services' in Microsoft's Mouth
• The Week in Microsoft: Can the Creator of Lotus Notes Also Reboot Redmond?
• Microsoft Rejigs Whole Organization; Boosts Ray Ozzie, Developers, MSN to Forefront
• Microsoft: Losing Margins to the Cloud?