I m sure Microsoft would prefer for you to choose their version of the Cloud , which is Windows Azure, but yet, the cloud can mean WCF/WSDL on your server.

The only true cloud out there is telecom - everything else is basically someone or some company s implementation of services offered over the Internet.

The Windows Phone 7 dev platform fully supports the calling of web services (SOAP/REST) so for your scenario, yes, you could think of yourself as the cloud.

Having said that, I think the notion that everything is up in the cloud simply implies that all of the information you ve given an installed app is most likely stored/managed using a service. This service is hopefully installed on a trusted cloud provider (that could be Microsoft Azure or any other provider). This makes sense in light of the fact that the information we put into phone applications usually is quite valuable. Having it stored on a trusted cloud provider s web site would obviously be good from a reliability/security perspective. But to reiterate, that (or any cloud service) is NOT a requirement.

I hope that answered your question.

I liken "cloud" to any service accessible via the internet. This can include the likes of Microsoft s Azure cloud offering, similar "Software/Platform as a Service" offerings from other vendors, dedicated server hosting or shared server hosting solutions which are available much cheaper.

There was some confusion for Windows Phone 7 developers when Microsoft s cloud offering was pitched to students when the "All In" campaign began, around the same time the Windows Phone 7 campaign was getting going.

For developer s the confusion was borne out of wondering how do I support the costs of Microsoft s or other Platform as a Service offerings when my app is going to be free or returning revenues of an as yet unknown quantity.

In a much needed positioning comment offered to windows phone 7 developers, Microsoft made their position clear on Cloud with respect to shared hosting services, their cloud offering and Windows Phone 7 apps.

In short it s a budgeting call. If you re service has the income to cover cloud services (could be from any provider), then it is the most scalable model. Until then, traditional hosting services are recommended.

This is explained in more detail in this post.

Azure Storage and WP7