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Microsoft moving to Live (Online sofware services)

Microsoft plans to launch Internet-based complements to its core products(Windows and Office), that create opportunities for the company to sell online subscriptions and advertising. Windows Live is a set of Internet-based personal services, such as e-mail, blogging and instant messaging. Office Live will come in both ad-based and subscription versions that augment MS' Office suite. The programs won't replace the paid software but instead seem aimed at capturing its online share. Windows Live at Live.com.

From BBC
The move to online software services is closely linked to the spread of high-speed access to the internet, as online software services are only as good as a user's access to the web.
Mr Gates, who is Microsoft's chairman and chief software architect, said the strategic shift would change his company's approach to doing business: "We are trying to put a 'service plus software' mentality into many of the product groups inside Microsoft."

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