Cloud service providers have the opportunity to wear another hat: venture capitalist. Anyone, anywhere that has a good idea can start their project, requiring as little upfront as Internet access. It would behoove companies like Microsoft to recognize good ideas and to nurture developers and their work.
Of course there would have to be terms, but those could be ironed out through a pilot program. Microsoft has the opportunity to be a start up's best friend, and it should recognize that. Heck, it's got the cash, and there are far worse things that it could blow it on (like acquiring all of Yahoo).
Innovation will have no borders: Two teenagers in Kolkata with an Internet connection could potentially start the next Facebook. Another upside for Microsoft is shared success will greatly benefit the Azure cloud development platform. Many of those projects could be open source as well - the methodology does not really matter.
Microsoft worked hand in hand with developers when it was a smaller company. Redmond made fun of IBM"s bureaucracy in those days; now it has become one itself. Microsoft should return to that mentality and dedicate direct resources to Azure developers - it has the opportunity.