With the tooling we have now, it makes no difference where the workload runs. As long as you avoid APIs that are not common (and you easily can), you can pretty much deploy your applications unchanged on AWS, GCE, Azure, Rackspace or your own metal, leaving them to compete on price.

For Microsoft, it's a losing game.

The only segment I imagine they can have a competitive offering is with Windows servers and Windows-based infrastructure (such as hosting your Exchange or Dynamics).