Having tried both services, I think Microsoft's offering has the best chance of success at this point.
That being said, there's still several issues that need to be addressed before I'd say "greenlight" on Microsoft's cloud initiative.
Security is, and will be, an ongoing concern. Just because something hasn't been hacked doesn't mean it won't be hacked in the future. And that applies to both cloud services and privately held server farms. It's a little too early to make a judgment call, but I think these cloud services will be at least as secure as the average businesses servers are. Actually, when I look at the relatively poor state of security I've seen with many SMB client's networks, out-of-the-box security will likely be better with cloud services. Security is the biggest single objection I'm seeing in businesses that are considering cloud solutions. Part of it is a perception issue - but there's also very legitimate and real security concerns about these services as they're currently set up.
Cloud is cloud - which means it's heavily dependent on your Internet connection and its quality of service. So the success of cloud solution deployments will be a double-edged sword. I expect most "business class" on-ramp connection's QoS to be acceptable initially
- then get bad as more and more companies pile on - then get good again as major ISPs and Telcos accept cloud services here to stay and upgrade their infrastructure to accommodate them. (Remember what happened with AOL when it first got really popular?) Right now this is the weakest link in the chain and the biggest potential source of grief once "cloud" catches on.
All this aside, there are some huge advantages to going with cloud for many SMBs - once it's working, the worries about security are addressed, and there are assurances you can get adequate bandwidth and QoS for your connection into it. But you can read all about that in the sales literature and on the provider's websites so I won't recap it here.
Gonna be "fun" no matter what you choose. And a rocky road no matter what.
This is definitely a technology where you don't want to be an "early adopter" unless you absolutely have to.
Note: For the record - 40hz is a Microsoft Partner. This allows him to be better informed about Microsoft than he would otherwise be were he not. But this relationship does not "buy" his opinions. Nor does being a MS Partner influence his recommendations to clients (or friends) about any technology, service, or software. He often recommends and implements FOSS solutions for his clients whenever they make sense or save money. So there!