Steve Ballmer speaks at the University of Washington today.

Speaking at the University of Washington this morning, Microsoft CEO Steve Ballmer laid out his vision for cloud computing -- describing a future in which distributed networks of data centers create new opportunities for businesses and individual "creators," and transform the activities of cloud computing providers.

Ballmer said he still sees a role for "smart devices," including computers running the company's Windows operating system. But in the course of describing his "Five Dimensions of the Cloud," he made it clear that he views cloud computing as a key driver of technology innovation. Continue reading for my rough notes on his talk.

Notes Follow, Not Direct Quotes ... Ballmer notes irony that he's never spoken at UW Allen Center, but speaks at universities all around the world They threw eggs at him in Hungary. Relationship between Microsoft and UW is amazing.

The microprocessor and the Internet are the gifts that keep on giving. The cloud is part of that Internet gift. The next phase. The next transition. This cloud thing is just another big step that the world is thinking about and buzzing about. Cloud buzzword might last three years five years, 10 years, but it's an area that will continue and that Microsoft is betting the company on. Ballmer sees five "dimensions" of the cloud.

1) Cloud creates opportunities and responsibilities. New software investments create new business models, new opportunities to start and form businesses. Also a responsibility to user to protect privacy, confidentiality. Cloud as opportunity. Currently there’s an advertising infrastructure to support small creators. With the App Store, Apple has done a very nice job, allows people to monetize, to commercialize their activity.

Cloud infrastructure will support a whole new class of creators. Open source an interesting phenomenon. Yet with the advent of new commercial infrastructures, inventors will be able to ask how to monetize, how to create value from innovation. Industry hasn't fulfilled the opportunities to create technology that empowers the creator.

Responsibilities to creators, to businesspeople. InPrivate browsing. In industry people said probably not a good idea, restraint to commercial activity. Yet we have a responsibility to users for anonimity, privacy, security. The amount of great IQ that’s got to go into that problem is really quite high. We think as a big company we’ve got to lead on privacy. Vibrant and healthy competition. For the creator to have to build a strong business, there needs to be a number of strong and innovative commercial players in the marketplace.

2) Cloud learns and helps you learn, decide and take action. Cloud needs to learn about you, needs to keep learning and figuring things out about the world that have been described virtually. Trying to understand health care debate, Ballmer tried to figure out what we spend as a society. Very difficult to do. The ability of the cloud to learn from the data that’s out there, and to learn from me what I’m interested in, is not what it will be two, three, four five years from now.

Machine learning. We’re actually trying to take a look at information and learn from it, understand human intent. Notion of learning about me and the world, making conclusions and then helping me to decide and take action is a very big idea. Not just the area of a few big companies. We have to open this up because there’s tons of people that will have ideas in specific ideas. People need to be able to plug in and take advantage of the cloud.

3) Cloud enhances social and professional interactions. These things all blend, and the cloud winds up being the place of innovation that pulls our lives together the way we want to pull them together.

The amount of innovation that’s still to come is amazing. The ability to connect people and help people connect is just beginning to be tapped. Facebook, Xbox Live, Twitter, there’s so much more to come. We'll know we’ve succeeded with this aspect of the cloud the day we all agree that the virtual interaction is as good as being here, in person. This dimension probably the most natural thing for Microsoft. Taking MS Office to cloud, letting it run from the cloud, helping people connect and communicate and express themselves, one of the core technical goals behind next version of Microsoft. Hotmail, Windows Live, other guys doing fantastic job helping consumers helping their social persona coming together.

4) The cloud wants smarter devices. The devices you use to access the cloud do matter. The hardware matters. The great smart device software is the best of rich clients and browsers, and natural user interface. You see those innovations today. PCs don’t look like PCs five years ago, and the cloud has a lot to do with it. Phones don’t look at all like they did five years ago. They’re going to get smarter.

But still need simplicity and low cost. (Hold up netbook, taps top of Xbox.) We start with Windows at Microsoft. It’s the most popular smart device on the planet. Goal is to make it one of those smarter devices that the cloud really wants. Make it more valuable in the world of the cloud. Push technologies into new devices, like the phone. Windows Phone 7 Series really designed for the cloud. As we bring our Windows Phone 7 Series to market, start to see interesting things. What we’re really trying to do is put people and places, content, commerce, all front and center for the user. Our opportunity now is to say how do we take the next step to make smarter devices, the kind that the cloud really wants.

5) Cloud drives server advances that, in turn, drive the cloud. Everything we do with server software and hardware now needs to change because of the cloud. Websites that get no action, then a lot. Voom, they scale up, Voom, they come down. There are scale issues of geography. Things move quickly, need server hardware and software for rapid deployment of new capabilities. We brought a cloud, cloud in box, next gen server. (Containerized data center being shown at UW as part of Ballmer’s appearance.) Virtualization is great if you’re trying to give a little more agility to software. But looking for big ideas, changes in way people write software. When you write an application it shouldn’t know what piece of hw it’s running on. Should be instantaneous. People shouldn’t be babysitting all of these machines. Azure cloud project at UW.

There’s peak load, data coming in, where do you go with it. We’re trying to drive that in many ways, but the catch point is that not only does the cloud drive server advances, but those also drive the cloud itself. Cloud should not be Microsoft and four other companies run. How do we give the cloud back to users, institutions. How do you run your own cloud? Refrigerator sized, plop it in some place here, stick in a hose and electricity and network connection. That should be a cloud that you can use for intgration wity other systems. We certainly see that businesses, governments ae now clamoring to buy the cloud and put it in their own facilities. This notion of the cloud has changed the server, and now the customer cloud, the cloud itself is being morphed by these innovations.

You’re entering one of the most fantastic industries on the planet. As the biggest local employer, we’d love to have you come do that at Microsoft. This is the time, this is the opportunity, and the cloud forms the basis. As I like to say at Microsoft, for the cloud, we’re all in.