At long last, Microsoft is ready to compete head on with Amazon Web Services

It’s been so long in coming that many folks stopped waiting for it, but Microsoft’s(s msft) Windows Azure Infrastructure as a Service — its long-promised response to Amazon Web Services — goes live for all customers on Tuesday.

Microsoft's Chicago data center is one of eight worldwide.

Microsoft’s Chicago data center is one of eight worldwide.

While he did not characterize Azure IaaS as an “Amazon(s amzn) killer,” Azure GM Bill Hilf did say Microsoft will match AWS on price for any of its base-level infrastructure — storage, compute instances, etc. — continuing a price war that flared last November when AWS, Google and Microsoft traded price cuts on their respective cloud storage offerings.

And, Azure IaaS pricing will be uniform across all geographies and data centers. Microsoft runs 8 data centers worldwide, 4 in the U.S., 2 in Europe and 2 in Asia. This is a pointed response to AWS, which relies heavily on its aging-but-humongous U.S. East data center farm in Ashburn, Virg. Many AWS services debut there and prices for U.S. East services are often lower than the same services originating in other AWS regions. “Many customers architect their applications in really weird ways to take advantage of that pricing,” Hilf said. U.S east is also the epicenter for most of the AWS outages over the past year or so.

And before you write off Azure as too late to matter, consider this: For the many companies that run Windows applications and may want to move them betwixt and between a public cloud and their own Windows-centric server rooms, Azure may be a really smart choice. In the run up to this news Microsoft announced Active Directory for Azure  last week.

PaaS priority hurt Azure

Microsoft’s problem is that it zigged when it probably should have zagged 3 years ago when it rolled out Azure as a full Platform-as-a-Service (PaaS). It was a great idea in theory, but by then developers — especially those in startups — were already flocking to AWS and its easy-to-spin-up-and-pay-for infrastructure.

That interest started to spread to bigger, more established businesses or departments within enterprises where developers loved the idea of being able to quickly build their own sandbox on AWS without IT interference. Fair or not, the perception soon became that Azure was a development and deployment platform for old-world Windows and .Net applications. It was deep and rich, but it was attacking a moribund market.

Ironically, those old-school Windows shops could now be Azure’s saving grace. The majority of legacy enterprise applications run on Windows and many of those enterprises are evaluating cloud deployments, although not many of them are wild about moving enterprise applications to a public cloud. Hilf’s argument is that since Azure’s underpinnings mirror those of Windows Server 2012 shops, applications can run on premises or in the cloud and partially in either.

Google Compute Engine, aka the wild card cloud

For many developers, the great unknown here is what impact Google Compute Engine will have when it becomes widely available. I would bet that might happen at Google I/O  next month, but who knows, Google(s goog) may want to counter program this Azure news. Plus the OpenStack Summit is this week with lots of news coming out of companies including Rackspace(s rax), IBM, HP and others —  which hope to combat with AWS with OpenStack-based public clouds.

But many think that Google, by virtue of its sheer scale, will be the cloud to watch vis-a-vis Amazon Web Services.

The other issue is whether Amazon, which is by all accounts the world’s largest public cloud provider, can maintain the advantages of being first to market with its gigantic cloud and whether it can attract enterprise accounts with higher-end services like RedShift data warehousing.

AWS has rolled out hundreds of services and features since launching in 2006 — Amazon CEO Jeff Bezos  put the count at 159 new features last year alone. That’s quite a head start and Amazon fans say it’s market position is unassailable.

But remember: People used to say the same about Microsoft.