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More than 35,000 startups are enrolled in Microsoft BizSpark (http://www.bizspark.com/About/Pages/Overview.aspx). Some of them are likely to be interested in web-hosting with simplified deployment. Also, Microsoft is building a PaaS (Windows Azure: http://www.microsoft.com/windowsazure/) which suggests that they think there is a market.

Disclaimer, I'm an AppHarbor co-founder.

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I'm very interested in your project. Do you use Azure as backend or a custom server provisioning system (server core + iis 7 + a sql server hotel)?

I have no affiliation with AppHarbor, but I do know a lot about Azure. I don't think it's really the best choice for running a platform like this, so I doubt they are using it. It's more of a greenfield platform because while you certainly can run legacy apps on it, in order to fully take advantage of the platform you have to design for it. For example. SQL Azure is a subset of what SQL Server 2008 R2 offers, so while if you use something like NHibernate, your app's data access code may still work, you may find that you have a reporting query that uses a specialized T-SQL feature it doesn't work.

Right now we run on top of Amazon EC2 Windows Instances.

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