Today's keynote at Microsoft's Build conference focused on cloud services, with lots of enhancements to the company's Azure Web services. I was impressed not only by how much Microsoft is trying to compete with Amazon Web Services and Google Cloud Platform, but by how it is trying to connect cloud services with traditional enterprise computing in ways that could make a lot of sense for many businesses.

Satya Nadella, president server and tools division, talked about the "cloud for modern business," highlighting specific changes for developers of Web-centric applications, mobile centric apps, and "cloud-scale and enterprise-grade" applications. He said the company was completely changing the economics of what complex applications have required in the past, reducing expenses by orders of magnitude through improvements in identity, integration, and data services.

But what I find most interesting are some new features, such as auto-scaling for Azure instances; an Azure version of the BizTalk integration service; and particularly a cloud-based Active Directory that will allow for single sign-on for both on-premises and cloud-based applications.

Nadella talked about how Microsoft has huge experience in the cloud, supporting the most diverse group of first-party applications, including Xbox live with 48 million subscribers, requiring 300,000 servers, including having served 1.5 billion games of Halo; Skydrive with over 250 million accounts; and Skype with 299 million connected users. He also noted that the company has 18 data centers, more than 100 colocation centers, and an edge networks as part of the Microsoft Cloud Infrastructure.

For building websites, Nadella talked about how the new version of Visual Studio 2013 enables "Best-in-class Web for the enterprise-grade sites you want to build."

A demo of Visual Studio 2013 showed how there is now just one choice for the ASP.Net framework, but that now integrates a lot of other things, including WebForms, MVC, Web API, and Signal R. Other new options including letting you set multiple browsers as a default within Visual Studio, so you can see how your webpage looks in multiple browsers at once.

Because SignalR is now built into Visual studio, changes you make in your code can be immediately reflected in multiple browsers. And in addition there seem to be a lot more changes, including a new HTML editor, better templates for Web front ends, and connection to open Web-standard middleware for things such as identity and authentication.

All of this works on Azure as well, as Nadella said there are now 130,000 Azure websites, including companies such as 3M and Heineken. He announced the general availability of Windows Azure websites, along with previews of Visual Studio 2013 and .Net 4.5.1.

For mobile applications, Nadella announced Windows Azure Mobile Services, which can support iOS, Android, Windows Store, Windows Phone, or HTML5 apps.

A demo created a to-do list app for iOS that stores the information in Azure, including simply adding a push notification. I was interested that it now supports Git for source control and about new features for creating custom APIs, improvements in the schedule, and identity features, including support for Microsoft, Facebook, Google, and other identity services.

Nadella said developers are already supporting more than 20,000 Windows Azure mobile services through the preview that started a year ago.

For cloud-scale applications, Scott Guthrie, corporate vice president for Windows Azure, announced the Azure auto-scale capabilities, with a demo showing how you can set a minimum and maximum number of virtual machine instances, plus a target CPU range. Other options allow you to set how quickly it will scale up and down the website, and auto-scale the back-end based more on the work left to be done rather than on system issues. Combined with recent policies that don't charge for unused VMs and per-minute billing, Guthrie said this will allow for massive efficiencies compared with other cloud services and on-premises computing.

One feature I find very interesting is Windows Azure Active Directory, which can work in the cloud or integrate with an on-premises Activity Directory, yet still supports single sign-on. With this feature, enterprises can integrate applications like Google Apps, Salesforce, Dropbox, Box, Concur, and even Amazon Web Services and allow single-sign on.

A company can even have a single dashboard of all of its SaaS solutions, and then employees can click on any one of them and automatically go to the application (with the log-in all happening behind the scenes). That should make things easier for lots of users. It is also good for SaaS management, since if an employee leaves and the active directory account is disabled, so is access to the SaaS services.

Box CEO and co-founder Aaron Levie talked about how this reduces the amount of "friction" involved in setting things up like identity. This will make it easier for startups and help enable the move of more applications to the SaaS model.

Guthrie also showed off Azure BizTalk services, which is designed to simplify the integration among applications, with a demo showing connecting on-premises applications with a SaaS app. He talked about the many data services, including NoSQL database and now HD Insight, which lets you spin up a Hadoop cluster on Azure. (There wasn't much demoed here; he said there will be more later in the conference.)

Finally Nadella returned to talk about Office 365 as a programmable service. A demo used Visual Studio to build a hiring application that that leverages Office 365 features such as documents and presence information.

Overall, the message was that Microsoft is very interested in competing both in the platform as a service (PaaS) and infrastructure as a service (IaaS) markets. What stands out for me is how the company is taking a lot of steps, from active directory integration to better ways of tying together applications. Those should make it easier for businesses to connect their existing enterprise infrastructure and applications with the cloud.