This is not a “rethinking” instance, as suggested in first paragraph of the full post; it is consistent with the strategy discussed during PDC 2008 sessions on SQL Services.
SQL Data Services, formerly known as SQL Server Data Services, is part of Microsoft’s Azure Services platform. (It sits on top of the Azure operating system, a k a “Red Dog.”) When Microsoft first discussed the concept for SQL Server Data Services, it sounded a lot like Amazon’s SimpleDB. Some criticized it for providing a limited subset of database features.
But this week, at the MSDN Developers Conference in San Francisco, Microsoft committed to providing a full hosted version of its database, as first reporting by my podcasting-partner-in-crime Gavin Clarke of the Register UK.