Microsoft tackles web services

2005-11-02 07:54

San Francisco - Microsoft, the world's largest software maker, on Tuesday unveiled web services based on its flagship Windows and Office products as part of its strategy to deliver software over the internet and cash in on a fast-growing market that has been staked out by smaller rivals.

At an invitation-only gathering for analysts and media held in San Francisco, Microsoft Chairman Bill Gates outlined what he called "live software" that aims to make software a service, linking all digital media, applications and devices.

The new web software will initially be supported by advertising revenue, though the company will later offer paid subscriptions.

"This is a big change for everybody," Gates told the gathering. "It is employing every part of the (software) ecosystem."

The company will offer "Office Live" to help small and midsize businesses use and maintain the suite of software used for applications such as e-mail, scheduling, spreadsheets and word processing.

For consumers, Microsoft unwrapped its "Windows Live" service that combines things like instant-messaging from its MSN service, e-mail and a service for creating blogs. The new service will also allow users to do such things as move information from one computer to another.

"Seamlessness is key to the live strategy," said Microsoft chief technical officer Ray Ozzie.

Stepped-up pressure

Upstarts such as Salesforce.com Inc have been growing rapidly by providing business owners with internet-based applications for tracking customer relationships and managing back-office functions.

Those applications are less expensive than competing programs from larger rivals because they are hosted on the software providers' computer servers, rather than those of their customers. Clients also pay a monthly fee based on how much they use the service.

Microsoft is at the beginning of a slight shift in strategy as it adds services to its existing software offerings, including its dominant Windows operating system, according to Matt Rosoff, an analyst at Directions of Microsoft, an independent research firm that tracks the company.

Executives at Microsoft "realise that they have to be there" in the market for so-called on-demand software, Rosoff said.

As the world's biggest software company, Microsoft easily dominates the market for operating systems to power computers with its Windows, as well as with the Office applications.

But Microsoft is facing stepped-up pressure from rivals such as internet search giant Google. Competitors have been able to capitalise on technology to quickly bring innovative and often frequently updated products to market.

Some industry watchers say the rise of the agile competitors could pose a threat to the Redmond, Washington-based company in some of its key markets.

- AFP