Microsoft recently published Windows Azure pricing, which resulted in a number of comparisons made.
John Foley claimed that Microsoft Beats Amazon regarding the price of Microsoft Azure vs. Amazon cloud services: "Amazon charges 12.5 cents per hour for a bare bones Windows Server instance; Microsoft's list price is 12 cents ... At their published rates, if you ran a Windows server in the cloud every hour of the day for an entire year, you'd save a mere $43.80 going with Microsoft."
Reuven Cohen did a similar comparison.
In my opinion, those comparisons assume that you are building a new Twitter or Facebook, where your application consumes a whole virtual machine (or several machines). In this case comparisons are quite fair. However, suppose you are a small ISV, who maintains several small applications for his small clients. In such scenario, Azure is out of the question - while you can host several small applications on one Windows OS instance on Amazon, if I'm correct you need a separate instance for each application on Azure, so you also pay each application by hour. Although Azure now supports multiple web roles in one instance, "a second or third Web Role cannot be assigned to a sub domain, they can only be differentiated by port.", so this is useless in our scenario. With each additional application you put on Azure, your monthly billing will go up much faster than on Amazon. The war may exist for high-end scenarios, but for low-end users Azure is probably too expensive and is already losing the war.
Considering this difference - OS instance (Amazon) vs. application instance (Azure), Azure would be better compared to Google App Engine, as noted by Roger Jennings and appears to be losing this war, too.
As a developer with .NET as a primary development environment, I was looking forward to Azure, but with current pricing it appears to be out of the question for most scenarios.