As Rob mentions, ASP.NET WebForms needs to go. It's always a bad choice and it makes it confusing to a lot of developers which of the 3 official MS frameworks they should pick. Dump WebForms and adopt 1 framework for simple stuff (WebMatrix) and 1 for more complex stuff (ASP.NET MVC).
They are also behind by half a decade when it comes to hosting. ec2 is the only thing keeping them in it, and that's at a cost. Even some of the recent hosting initiatives (AppHarbor, EpicWinHosting) are, at best, going to take years to catch up. This is especially true when you take SQL Server into account (SQL Express sucks, deal with it).
WebMatrix is a step in the right direction, but they need to address their messaging, increase their focus, and resolve the hosting gap.