I had a look at the latest on SQL Data Services, also called SQL Azure at
http://www.msteched.com/online/view.aspx?tid=01053bed-425d-4152-a293-e96fef6240fc and I would recommend all you database folk have a look as well.
I see some really good things here, but also some troubling issues. The bad news:
1. There is no integration with Windows security, therefore no real way to audit data access. This is a big issue for anyone storing sensitive data or with a regulatory requirement for a data access audit trail (e.g. medical applications and anyone holding my financial data).
2. There is a 10 GB limit on database size – read small applications only.
3. This is a hosted environment; therefore people outside your organization have physical access to the data. This is a problem in certain regulated enterprises, again like medical providers.
The good news:
1. Rapid deployment. No more need to wait to get hardware installed.
2. The hosting company is Microsoft, so the physical security is probably much better here than it might be for the typical small or medium size business.
3. This is ideal for smaller applications with shorter lifecycles. For example, dealing with contractor to sub contractor relations on a short term project, or quick applications to take advantage of a trend or seasonal retail opportunity (ski season is almost here, for example).
4. There would appear to be a great opportunity for “application in a can” scenarios, where you want to have a shell of an application you can modify rapidly and deploy, like an on line store or catalog that requires a small amount of customization.