The memo specifically called out Office365 and Azure, which is the foundation of their plans to extract an annual tithe from all the copies of Office in the world.
They've been seeing this day come for over a decade, and it's been their number one concern. How do they keep selling something that isn't improving as much as its price tag might suggest? Office 2010 had only one real competitor, Office 2007, which in turn had only Office 2003 to beat. Since Microsoft has turned the corner on code quality, their latest products are so well written that the users have stopped clamoring for a not-broken version. They aren't putting out an Office 2013 because even their thickest users no longer see any value in upgrading.
The thing Microsoft believes users really want these days is multiple-device integration and someone else to manage their systems. Users want their documents at home, at school, on the road, at the office, and on their phone (specifically on their iPhones and Androids, screw you Windows phone.) And they don't want to back up their stuff any more, they'll pay someone else to back up their stuff. This move lets them give away Office for free, because they get to collect the rent on your files forever.
Oh, and did we tell you what happens if you stop paying? Nahh...