Microsoft Corp. (MSFT) on Tuesday unveiled pricing for its cloud computing platform, Windows Azure, the latest signal the software company intends to compete aggressively in the emerging market to provide enterprise computer services over the Internet.

Azure, which Microsoft announced eight months ago, is the central plank of the company's strategy to grab a share of cloud computing market, which allows customers to access computer services over the Web and pay for them on a metered basis.

"Microsoft is throwing down the gauntlet and saying it's going toe to toe with cloud providers," said Dana Gardner, a principal analyst at Interarbor Solutions.

In becoming a cloud computing provider, Redmond, Wash.-based Microsoft must balance the prospect of creating a new revenue stream against the potential loss of sales from its key software franchises, like the Windows operating system and server tools that could be supplanted by the new services.

Azure will compete with a host of other cloud computing pioneers, like online retailer Amazon.com Inc. (AMZN). Other contenders include archrival Google Inc. (GOOG), which offers some Web-based programs, and software-as-a-service provider Salesforce.com Inc. (CRM)

Azure will provide the platform on which independent software developers and corporate customers can create Microsoft-compatible cloud applications. On Monday, Microsoft also announced it will offer Web-based versions of its popular Office suite of applications to consumers.

Microsoft shares were down 0.5% Tuesday at $23.11.

Microsoft's initial payment plans are targeted at the independent software developers who build applications designed to run on Microsoft's platform, though it will later attempt to sell the services to its corporate end users. The plans include fees for the computing and storage capabilities that are used.

Developers are being offered the option of paying on a per-consumption basis, or signing up for a subscription lasting six months or more.

Bob Muglia, who heads Microsoft's servers business, said the key appeal of Windows Azure would be that to help customers to minimize labor costs associated with maintaining data centers. Customers will be able to run applications based either at Microsoft's or their own data centers, built on Azure.

Muglia said the market for cloud computing services is still very undeveloped, so Microsoft has a good opportunity to build market share quickly.

"The cloud environment is still so nascent," he said.

Analysts note that the large existing base of Microsoft developers should help Azure gain traction.

Muglia acknowledged that Microsoft's profitability from the tools it sells to provide cloud services will likely be lower than for on-premise software, but said he expects this to be offset by the number of customers choosing to host services on Azure. Microsoft will offer a 15% to 30% discount to developers and resellers who sign on for six months or more. It plans to unveil pricing for corporate customers in the second half of its fiscal year, which began in July.

On the pay-per-use model, Microsoft will charge 12 cents per hour for computing, 15 cents per gigabyte for storage and 10 cents per 10,000 storage transactions.

Although its pricing model offers different tiers so a direct comparison is difficult, Amazon.com charges 12.5 cents per hour and 15 cents per gigabyte for storage in two of its pricing models.

Gardner said Microsoft had priced its Azure service "aggressively," suggesting the company is serious about establishing itself as a cloud computing provider, despite qualms about the impact the move could have on its own business model.

But while Microsoft appears to be willing to practically give away the computing access in the development phase, Gardner suggested it might be expected to raise prices once cloud computing applications moved into the mainstream.

- By Jessica Hodgson, Dow Jones Newswires; 415-439-6455; jessica.hodgson@dowjones.com

- By Scott Morrison, Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com