In a move that wasn't expected but is certainly logical enough, Microsoft this week revealed that it has created a new organizational division within the company that combines its previously separate Windows Server and cloud computing efforts. The new division, called the Server and Cloud Division (SCD), is part of the broader Server and Tools business unit and is designed to align the development of Microsoft's next generation on-premises and hosted server products.

"The new organization presents a great opportunity for us to deliver more value to our customers and signifies that we've moved beyond an advanced development project to an important and growing business for Microsoft," an unattributed posting to the Windows Azure team blog reads. "We'll ensure that customers get the full benefit of Microsoft offerings that span Microsoft's public cloud, on-premises solutions, private clouds, and clouds that our partners host."

Windows Azure previously fell under the aegis of Microsoft Chief Software Architect Ray Ozzie. But with the reorg, it is now the responsibility of Amitabh Srivastava, a key Azure architect. He will report to Bob Muglia, the president of Microsoft's Server and Tools Division. The Windows Server and Solutions group, headed by Corporate Vice President Bill Laing, no longer exists but is now part of the SCD. Laing now reports to Srivastava.

Microsoft says that by combining these previously separate groups it can better facilitate the "bilateral sharing" of technologies between Windows Server and Windows Azure. The company discussed these plans in general terms at the Professional Developers Conference (PDC) last month in Los Angeles.

The timing of this announcement is likely not coincidental. Windows Azure is just now launching as a new operating system offering and will compete with other cloud-based platforms from companies like Google and Amazon. "We welcome Microsoft's entering into the cloud, and we think it reinforces our position," Google Director of Product Management Matthew Glotzbach said recently