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Wednesday, November 02, 2005

Microsoft unveils web-based strategy

Microsoft is to deliver versions of its leading software products over the internet, with Bill Gates calling it "a big change".

At a presentation in San Francisco, Mr Gates, the Microsoft chairman, outlined his plans for a next generation of "live software" services, which willmake packages accessible on demand over the web.

"This is a big change for everybody," Mr Gates said. "It is employing every part of the [software] ecosystem."

Analysts said the move had been expected because of increased competition from companies such as Google, which industry watchers say has outmanoeuvred Microsoft by offering a string of competing products over the internet.

Competitors who already provide web-based software sevices branded the move inevitable. Marc Benioff, the chief executive of Salesforce.com, a leading web-based software provider, said: "Bill Gates is still trying to prove Microsoft’s relevance in the age of the internet.

"The real innovators ... have all succeeded because Microsoft has let us down on innovation,"he told Times Online.

Microsoft "clearly gets where the focus of the competition needs to be," Tim O’Reilly, the publisher and software design guru, told Reuters.

"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," he added.

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

"It’s the Day of the Dead," Mr Benioff said. "Bill Gates and Ray Ozzie announced a series of 'internet-based software services' with 'Live' appended to some familiar names: Windows Live, Microsoft Office Live, Windows Live Messenger, and so on.

"The clear implication is that their current product line should be renamed with similar zeal: Windows Dead, Microsoft Office Dead, and Windows Live Messenger Dead."

Talking to the Sunday Times while in London last month, Mr Gates shrugged off criticism, saying the company had more than doubled in size in the six years since he stood down as chief executive.

"We have a lot of breakthrough things and we are able to be ambitious because of the size of the company," he said. "In the past six years we have done more and moved faster."

Mr Gates was speaking hours before Microsoft released another mixed set of results. Although first-quarter profits rose 24 per cent to $3.1 billion (£1.8 billion), it lowered forecasts for sales and earnings, and reported weak results for MSN, the internet business that competes with Google.

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