Update: Microsoft touts online Windows, Office services

Computerworld - SAN FRANCISCO -- Microsoft Corp. today took the wraps off a new initiative through which it aims to deliver more of its software and services over the Internet.
Windows Live and Office Live will give users much of the functionality of the company's two most profitable products but without requiring them to install and maintain the software on a computer hard drive, said Microsoft Chairman Bill Gates and Ray Ozzie, a longtime software services pioneer who recently joined Microsoft.

The announcement, made at a news event in San Francisco, underscores how much Microsoft has turned its attention toward the Internet and the challenge offered by hosted, software-as-a-service upstarts such as Google Inc. and Salesforce.com Inc., which make most of their revenues from selling ads or subscriptions.

Still, Microsoft officials emphasized they are not yet ready to completely abandon the packaged software model that has served the company so well.

"These are natural complements to Office or Windows, but they don't replace them," Gates said.

"Microsoft knows there's a lot of life left in the traditional Office and Windows platforms," said Michael Gartenberg, an analyst with JupiterMedia. "I don't think this will cannibalize even one sale of Microsoft's existing products."

Taking many of the features from Microsoft's MSN portal and repackaging them in a spare, Google-like interface, Windows Live lets users -- generally expected to be consumers – pick the services they wish to add, such as their e-mail, RSS feeds from favorite blogs, Web sites and bookmarks.

Other features of Windows Live include a Virtual Earth map program that challenges MapQuest and Google Maps, an improved Windows Messenger that unifies users' contacts lists -- including those in e-mail and instant messaging systems -- and a Web-based e-mail system with an Outlook-like interface that will gradually replace Hotmail and offers improved security. Users can beta-test the services at www.live.com or www.microsoftgadgets.com.
Microsoft's MSN Internet division, created nearly a decade ago to compete with America Online Inc., then the dominant player in the Internet market, has until now led the charge against Yahoo Inc. and Google.
The new initiative, however, spans Microsoft's more traditional Windows and Office businesses and also reflects a recent company-wide reorganization that put MSN under the Windows division and resulted in Ozzie, the company's chief technology officer, being put in charge of efforts to deliver software services over the Web.
Aimed at small businesses, Office Live will come in three versions when it is launched next year. A free, advertising supported version called Office Live Basics gives small