Due to be formally unveiled in four weeks time, the cloud operating system is part of a broad strategy which aims to answer critics, who believe Microsoft is not addressing the new ways of buying and using applications, such as software as a service.
Companies such as Salesforce.com have succeeded in offering end-users an approach to running applications, that makes operating systems, server and IT infrastructure software effectively redundant. The software and hardware to support such applications are hosted by a third party and accessed over the internet using a web browser.
Speaking today at Microsoft's Technology to Change your Business event in London, Ballmer confirmed Microsoft was committed to developing its infrastructure and server software.
But rather than provide software as a service, he said Microsoft would develop software and services, which could be accessed either from the internet through cloud computing or installed as desktop and server software.
He said the new operating system would address the challenges of developing, deploying and supporting application that can run either in the internet cloud, or in a datacentre. "We have a new software development model to [allow] applications to run where it makes sense."
The strategy differs from pure cloud computing, where the applications runs only on the internet.
Ballmer said that Microsoft aims to write applications for the cloud which also work as server software in a datacentre, or on a desktop.
The Windows for cloud operating system is one part of Microsoft's overall strategy to provide software and services.
As the strategy is rolled out, products such as Exchange, Microsoft Live, Active Directory and MS Office will be able to work both in the internet cloud, and the traditional PC and server environment, said Ballmer.