I am not at the PDC, nor watching the keynotes, but Paul Gielens has a great post where he calls Windows Azure "the 5th generation of computing" and "Windows Azure builds in particular on the web and SOA generations of computing/" That would make it very interesting indeed. It looks like they took what was formerly BizTalk Services that I talked about way back here (which was a lousy name) and renamed them "Microsoft .NET Services" and layered them on top of Azure. See his post for a diagram and links.
The Azure page even has it titled as "Azure Services Platform." and describes it as "Windows® Azure is a cloud services operating system that serves as the development, service hosting and service management environment for the Azure Services Platform. Windows Azure provides developers with on-demand compute and storage to host, scale, and manage Web applications on the Internet through Microsoft® data centers.To build these applications and services, developers can use their existing Microsoft® Visual Studio® 2008 expertise. In addition, Windows Azure supports popular standards and protocols including SOAP, REST, and XML. Windows Azure is an open platform that will support both Microsoft and non-Microsoft languages and environments."
My friend, Jon Flanders, also notes, All the APIs for this new platform (Windows Azure): storage, queues for communication are all RESTful endpoints." Wow!