Office 365 is Microsoft in the Cloud. They are selling IaaS services via Lnyc IM, SharePoint collaboration, and Exchange Server in the Cloud. The solution works both with Office in the Cloud or you can connect and collaborate via Office 2010 on your desktop.
It seems idea for smaller Enterprises that would like to have a full Enterprise information management solution but can't afford a data centre I really don't see existing data centres moving to Office 365 in the near future.
I have signed up for the Beta but Microsoft has not replied yet. A word to the wise, Microsoft has tried and pulled other Cloud solution in the recent past. I had a small business using Windows Live a few years back only to find it became a much more limited SkyDrive. Not cool. I also made dozen of PopFly Microsoft MashUps only to have them vanish one day. You are going to want to give Microsoft a year or so to prove this.
But I am pretty confident that this product will be a major part of Microsoft future.
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