The April crash at Amazon's EC2 wasn't a huge disaster because it brought down so many sites, for example. It was a huge disaster because most customers had a limited ability to monitor or control backend server and application processes compared with on-premise apps, and hadn't made the same arrangements for off-site disaster recovery they would have with hosted or on-premise setups.
Microsoft has wrestled with its own internal issues during the past three years, as it tried to meet demand to put its cash-cow office suite into the cloud without alienating the VARs and resellers on which it depends, or hurting its own income by cannibalizing sales on on-premise versions of Office.
Office 365 may not be the ultimate answer, either to Microsoft's financial conflicts or the question of how to deliver productivity apps from the cloud that are as attractive and powerful as those on the desktop.
The latest edition is enough of an improvement to give Google Apps more than a run for its money, however. For the first time Office 365 puts Microsoft ahead in the race for the best cloud-based suite – at prices higher than Google's, but low enough to keep Office 365 from being bumped off the short list even at companies for which cost is a first priority.