Microsoft shifts to ad-backed web software services
Microsoft Corp., the world's largest software maker, said it will make a strategic shift by offering software with online services, a move analysts said was prompted by competition from Google and other rivals.
Outlining what it said was its biggest strategy change in five years, the Redmond, Washington-based company told analysts and reporters on Tuesday that it would deliver many of its key products and services online, some supported by advertising, as well as by selling subscriptions or licenses for software installed on computers.
Windows Live and Office Live will give users some of the basic features of the software giant's two most-profitable products, but without the complexity of installing and maintaining the software in computer hard drives.
"We are trying to put a 'services plus software' mentality into many of the product groups inside Microsoft," said Bill Gates, Microsoft's chairman and chief software architect.
Microsoft also said it planned to fold many well-known products in its MSN division into a new brand called Windows Live. The move will combine its instant-messaging service, a new online email service replacing Hotmail, Web security, data storage and other features, all available via the Internet.
The software giant is trying to defend its mainstay Windows and Office software franchises by borrowing from ideas used by challengers such as Google, Salesforce.com, WebEx, Yahoo Inc. and scores of start-ups.
While most of these rival programs have tiny audiences relative to Microsoft's hundreds of millions of Office users, the simplicity and power of Web-based software has captured the imagination of many software developers across the industry.
"(Microsoft) clearly gets where the focus of the competition needs to be," said Tim O'Reilly, publisher and software design guru, on the sidelines of the event.
"There are going to be some fabulous new services. But whether they are built by Microsoft or by Yahoo or Google or Salesforce remains to be seen," O'Reilly said.
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