Microsoft has made significant progress in improving its hosting platform in the past five years. For instance, the latest generation of Microsoft server software has enhanced tools for managing and provisioning servers. I saw impressive demos of the latest techniques for providing servers quickly as needed.
I came away realizing that Microsoft is serious about its philosophy of Software + Services. It is different than the Software as a Service (SaaS) paradigm which holds that hosted software is inherently superior to on-premise deployment of solutions. Microsoft believes that customers need choices and options.
For some customers, starting in a hosted deployment provides a quicker path to get solutions up and running, removing the need to acquire and configure hardware or worry about network infrastructure. Other customers may started on premise and move to hosting in order to meet growing customer demands.
Microsoft's Software+Services approach means that the same code base is used, regardless of where the solution is deployed. The solution does not have to be rewritten to be moved to a new server, providing flexibility that all customers should appreciate.