Will companies want to host virtual PCs in the cloud? Microsoft and Citrix Systems think so. For a certain set of PC users – even those accessing traditional Windows PC applications from a tablet or smartphone that is not running Windows – not only is a physical PC not a necessity, but neither is a data center serving up virtual …
You cannot compete, service provider licensing specifically _disallows_ being able to provide desktops. The closest you can get is skinning a server OS to look like a windows 7 desktop.
You cannot host XP/win7/PoS unless the hardware it's on is dedicated solely to the one client and that it cannot share any other resources like a SAN. The client has to has software assurance for the own desktops in the office and assign them to you for usage reporting and a pile of other hoops that you have to jump through.
MS want this market for themselves to prop up the flagging desktop OS sales.
Multi-tenant DaaS Offering
You can in fact deliver a DaaS offering including XP/Win7/Win8 while leveraging multi-tenancy at the management, brokering, directory services, networking and storage layers. It is true however, that Windows client operating systems are not covered by SPLA and require dedicated hardware at the hypervisor layer (not storage). This is explicitly covered on page 3 of the following FAQ:
While this requirement is nonsensical and only makes money for the hardware providers (not Microsoft), there are a number of cloud service providers doing this today including Dell, Navisite, Dimension Data, Fujitsu and others that do offer full Win client OS machines as a DaaS service.
From digging deeper into the articles being published on this, it seems that the XenDesktop on Azure is really creating the 1:1 user to WinServer "skinned" desktop that does not require the dedicated hardware and can be covered under SPLA licensing.