He kinda has to
"Nadella is banging the "cloud" drum as loud as he can..."
He's basically obliged to do that. The term 'cloud' has become a buzzword that the majority really believe in, including MS's investors. If he doesn't bang the "cloud" drum as loud as he can then in the eye of MS's investors he's letting them down. And in the USA that's a sure way to get sued to smitereens.
"If, however, I'm not completely batshit bananas here then many - if not most - businesses agree with me that we have yet to be convinced that this is the future we want to buy into. "
I'm sensing only sanity in your entire comment. No bananas in sight.
Being a buzzword doesn't mean that "cloud" is right. Like you I know that it's a terrible solution for a very large proportion of business users out there.
I also think that it will prove to be a bad thing for consumers too. Data sovereignty and law matter just as much to individuals as to businesses. Who is to say whether pictures or comments that are perfectly normal and acceptable in, say, a European culture won't fall foul of law now or in the future in, for example, the USA? There's already problems with companies like Facebook imposing American prudishness on its European users.
Putting one's pics and stuff into someone else's cloud means that you're dependent on that country's politicians not passing draconian laws to your detriment. Ok so that might not ever become a problem, but uploading a picture today means taking a lifelong bet. Even trivial Tweets can come back to haunt you. That sort of thing can be career limiting.
And who is to say that clouds won't evaporate? There's no guarantee of one's personal data being permanently stored by cloud. If you'd got your lifetime's collection of photos on MS's cloud and MS suddenly and gratuitously go bankrupt, where's your photos now? Most consumers won't have a clue about that possibility and will actually believe the advertising.
"They are betting on the cloud - and mobile - to the point that they are willing to simply throw away all previous segments and businesses, and along with it any hope of being viewed by the general public, sysadmins, or people who sign the cheques as different (let alone better) than Oracle."
Unfortunately Apple has shown the market that business customers don't generate as much profit as the consumer market. MS have to follow suit. Investor pressure again, they want a piece of that action. In MS's investor's eyes business customers can go hang if the consumer market is going to deliver 10 times as much profit.
As it happens I don't think that MS are capable of generating a consumer market like Apple have. They're just not that sort of company. If sales figures are anything to go by Windows 7 and XP (i.e. old stuff) is what you use at work whilst Android & iOS (i.e. not Windows) is what you actually buy for yourself as a consumer. MS's investors can't see that and even if they did they probably wouldn't care. Investors aren't into keeping shares long term, all they want is for the price to rise in the short term so they can make a quick buck.
If taken to the extremes this strategy will drive business computing users increasingly towards Linux. I like and use Linux professionally. It's so close, but unfortunately I don't think it is yet the universal business tool that many would like it to be.
A Windows Domain is a very good way of controlling a business's desktops. Linux can use a domain for authentication and other services and can indeed serve it (Samba 4), but it's pretty hopeless in comparison to Windows when it comes to controlling what desktop users can and cannot do.
In a business setting you quite often need the level of control that Windows gives you. Total user freedom is sometimes something you have to take away so that your business can be seen to be complying with the various laws that control different business sectors.
If Linux did get (free?) management tools akin to a Windows Domain then I think that it would be game over for MS. Even if they did reverse their strategy and try to keep their traditional markets as a plan A.5 I think that the business sector would tell them to get stuffed.