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While most Americans will be focused this week on tomorrow's general election, Microsoft (MSFT) may be focused more on what happens later in the week in China.

The selection and announcement of new leadership for China should validate Microsoft's recent decision to cooperate with the country, on behalf of its Azure cloud.

TechCrunch is offering some political sniping over this but basically the deal is simple. China will push Microsoft's cloud, while Microsoft will make sure that the cloud, and the cloud's users, follow Chinese law.

For Microsoft, the Azure cloud can solve one of its biggest China problems, namely monetization of Office. By selling the office suite as a service rather than on disk, Microsoft can pick up a lot of revenues that it feels are now lost to piracy.

As ChinaDaily notes, this is a radical change in Microsoft's business model. The company is now far more focused on Windows Server than on PCs in China, because that's where the opportunity lies to gain direct revenues.

For China, tying up with Microsoft offers control beyond what its "Great Firewall" can deliver. It centralizes resources office workers use most. For Microsoft, bringing Azure to China gives it a big market win for a product whose U.S. share is deeply troubled, and offers monetization for software that is now heavily pirated.

Regardless of how you feel about China, this has to be seen as bullish for MSFT. No U.S. company is as well-positioned to benefit from the transition to cloud in China as Microsoft today.

Source: Microsoft Looks To China For Growth With Azure Cloud