If a credible recent rumor is true, Microsoft is preparing a dramatic expansion of Windows Azure that will include an Azure-hosted desktop virtualization service, or what I think of as a hosted VDI (Virtual Desktop Infrastructure) solution. Is VDI about to get a lot less expensive and complex?

Related: Microsoft’s New Windows Azure IaaS Challenges Amazon

I will never forget the day I found out about Windows Azure, Microsoft’s ever-growing collection of public cloud services, and the way it hit my befuddled brain like a steamroller. Since that day, Azure has grown in leaps and bounds with each passing year, and the Microsoft executives who kicked off this initiative—Ray Ozzie and Bob Muglia key among them—are now long gone from the company. Yes, a lot has changed in the past several years. And a lot is going to change in the months and years ahead.

I will be writing a lot more about Windows Azure in the near future, as this incredible platform has really come into its own. But what I want to focus on today is a compelling peek at a future Azure service that I think will really speaks to Microsoft’s view of itself as a purveyor of devices and services.

According to my Windows Weekly co-host Mary Jo Foley, Microsoft is prepping a service, codenamed “Mohoro,” which she describes as “a pay-per-use ‘Windows desktop as a service’ that will run on Windows Azure.” Expected to ship in 2014, Mohoro isn’t exactly imminent. But I find a number of Foley’s details about this service to be telling. Like Windows Intune, the cloud-hosted alternative to System Center Configuration Manager (SCCM), Mohoro will be hosted on Azure. But like VDI today, Mohoro is a product of Microsoft’s Server and Tools business, not Windows client.

If you’re not familiar with Microsoft’s internal battles over VDI, the short version goes like this. The Windows client division prefers to push the notion of rich (but complex) PC-based clients while the Server and Tools division has offered VDI as an alternative. So the investments on the VDI side are all in the data center, with expensive (and complex) servers and infrastructure, rather than on the desktop. And instead of PCs, users can utilize low-cost thin clients.

These dueling solutions can be seen in two ways. On one hand, we’ve got two different parts of Microsoft offering completely different ways to solve the same problem, with their respective solutions matching up nicely to their own product offerings. On the other hand, one might argue—and Microsoft, to be fair, does so—that the dual, not dueling, offerings are just a reflection of the choice the company offers customers holistically.

For various reasons, VDI has never really taken off as a viable alternative to real PCs. Part of the reason is just IT pro familiarity with Windows and PCs, and the historic strengths of Microsoft’s deployment tools. But part of the reason, as noted, is the complexity and cost of VDI. It requires a lot of infrastructure and expertise. And when you consider the industry-wide move to cloud computing, VDI seems increasingly outdated.

That’s where Mohoro comes in. If it makes sense to host email, document/collaboration, and communications in the cloud with Office 365, or host PC and device management in the cloud with Intune, why can’t Microsoft also offer hosted PC desktops? It’s like VDI without any of the obvious problems with VDI.

Mohoro’s not a slam dunk, of course, and we need more details. Fears about performance and bandwidth are of course understandable, as are concerns over moving entirely to subscription-based services that exist in a public cloud. Still, it’s interesting to me how natural this solution seems to fit within everything else that’s going on with Azure—and there is a lot going on there—and how the once fanciful is now just the way things are.

What a world.