But why are these two tech giants battling it out so fiercely for the opportunity to give away free services? Both Live@Edu and Google Apps for Education are advertising free, which means there is no means for directly profiting from the move. But even if advertising revenues were on the table, they’d be small potatoes compared to what’s really at stake here: the hearts and minds of the next generation of web users. The battle for tech loyalties is as ideological and hard fought as the Cold War between communism and capitalism and the currencies by which victory is won are much the same. Namely, spheres of influence and indoctrination. By giving 700,000 students and faculty a free Microsoft Live account and an educational directive for becoming familiar with Microsoft’s cloud computing products, Microsoft has all but solidified those individuals as lifelong Microsoft users. Three, five or ten years down the road, it’s far more likely that citizens of Kentucky will Bing before they Google.

Aside from that, the smooth operations in Kentucky accomplish the increasingly difficult task of making Microsoft look good. While Google and Apple have experienced their own share of public embarrassment (Job’s network difficulties during the iPhone 4 presentation and Google’s admission of a privacy snafu regarding Street View), as the incumbent king of software, Microsoft regularly runs the risk of seeming irrelevant. By rolling out what is being called the largest cloud deployment in the U.S. over a single weekend, Microsoft proves that the old man’s still got it.