Ray Ozzie's telling analysts how Microsoft will provide a virtual computing platform similar to Amazon.com's elastic computing cloud.

Utility computing is one of the major services to be powered by Microsoft datacenters, such as the one in Quincy and a new one being developed in San Antonio. It's part of a platform Microsoft is building to position itself as the blend of local and online computing evolves.

Amazon's service is especially popular with startups because it's cheaper for new companies to rent computing capacity than to set up and manage services. But Amazon's service doesn't promise service levels that big established companies expect.

At the other end of the spectrum are premier utility computing services offered by companies such as IBM and Sun. It sounds as though Microsoft is trying to appeal to both ends.

Ozzie didn't promise service levels, but implied they'd be there. He said Microsoft's utility computing services will appeal to enterprises as they increasingly get used to services.

"Big companies will find this useful especially for their customer facing systems in handling demand spikes,'' he said.

Microsoft hosting is one of three options Microsoft is offering businesses, Ozzie said. Companies can also choose on-premises servers, which offer more control and customization, or choose hosted services offered by partners with vertical expertise, he said.

Services hosted in Microsoft's datacenters "will likely be much more horizontal in nature and where we'll take a paltform approach to it and offer the lowest possible cost that we can.''

Ozzie so far hasn't offered specifics about price or timing but utility computing was described as part of a group of services the company will introduce in the next 12 to 18 months.