Speaking to analysts and reporters in San Francisco yesterday, Microsoft chairman and chief software architect Bill Gates said "we are trying to put a 'services plus software' mentality into many of the product groups" inside Microsoft.
The firm will deliver many of its key products and services online, some supported by advertising and others provided on the basis of subscriptions, or licences for software installed on computers.
Gates outlined the group's plans to combine many of its well-known products into its MSN division, which it will call Windows Live.
Windows Live and Office Live will give users many of the basic features of the firm's two most profitable products, but without the need to install and maintain the software on a computer hard drive.
The initiative will combine its instant messaging service, a new online email service to replace Hotmail, web security, data storage and other features, all accessible via the internet.
Microsoft is trying to defend Windows and Office from by "borrowing" ideas introduced by so-called challenger firms such as Google, Yahoo! and Salesforce.com.
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