Microsoft Corp. (MSFT) on Tuesday unveiled pricing for its cloud computing service, dubbed Windows Azure, the latest signal the software company intends to compete aggressively in the emerging market to provide enterprise computer services over the Internet.

Azure, which Microsoft formally announced eight months ago, is the central plank of the company's strategy to grab a share of cloud computing market, which allows customers to access computer services over the Web and pay for them on a metered basis.

"Microsoft is throwing down the gauntlet and saying it's going toe to toe with cloud providers," said Dana Gardner, a principal analyst at Interarbor Solutions.

In becoming a cloud computing provider, Redmond, Wash.-based Microsoft must balance the prospect of creating a new revenue stream against the potential loss of packaged sales from its key software franchises, like the Windows operating system and server tools that could be supplanted by the new services.

It will also compete with a host of cloud computing pioneers, like online retailer Amazon.com Inc. (AMZN). Other contenders include archrival Google Inc. (GOOG), which offers some Web-based programs, and software-as-a-service provider Salesforce.com Inc. (CRM)

Azure will provide the platform on which independent software developers can create Microsoft-compatible cloud applications. On Monday, Microsoft also announced it will offer Web-based versions of its popular Office suite of applications to consumers.

In recent trading, Microsoft shares were down 0.6% at $23.09.

Microsoft's initial payment plan is targeted at independent software developers who build applications designed to run on Microsoft's Web platform. It includes fees for the computing and storage capabilities that are used.

The company also said it will offer a 15% to 30% discount to developers and resellers who sign on for six months or more. It was not immediately clear what the long-term rates will be, nor has pricing for end users been determined.

On the pay-per-use model, Microsoft will charge 12 cents per hour for computing, 15 cents per gigabyte for storage and 10 cents per 10,000 storage transactions.

Gardner said Microsoft had priced its Azure service "aggressively," suggesting the company is serious about establishing itself as a cloud computing provider, despite qualms about the impact the move could have on its own business model which is overwhelmingly reliant on traditional packaged software sales.

Gardner said Microsoft's prices, which are broadly in line with those charged by Amazon.com, are designed to entice developers to build applications in its cloud, rather than that of competitors.

But he suggested that while Microsoft appears to be willing to practically give away the computing access in the development phase, the software company might be expected to raise prices once cloud computing applications moved into the mainstream.

-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455; jessica.hodgson@dowjones.com

-By Scott Morrison, Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com