Microsoft said that it was looking to add web-delivered services to its existing software business model, on Friday.
At the annual financial meeting, Ray Ozzie, the chief software architect, told investors and reporters that the company was changing the way it does business.
The overall services opportunity is largely additive, increasing revenue opportunities for both our existing software licensing model as well as our services business model, Ozzie said.
The strategy is to get away from a model where users need to install specific software on to their computers, but instead access all the software they need over the internet - a model that will keep users connected to their data and applications regardless of which computer they are using.
It's not unreasonable to think we'll catalyze some level of additional PC and device purchases, he said.
The model falls under the service-oriented-architecture paradigm, a model where software is seen as a service or utility you use when you need it, like water or electricity.
Merril Lynch's Kash Rangan believes service oriented models, such as these, will play a significant role in the future.
We foresee a significant shift in the software industry, he said in a note to clients earlier this month. Service-orientated-architecture will change the dynamics in the software industry as significantly as the move to client/server did in the early 1990's.
Current advocates of this software model include Microsoft and its competitors, including Google, Salesforce.com, Sap and hundreds of startups.
A fundamental transformational shift toward services is a necessary move for all technology companies now, Ozzie said.
IBM, the world's largest technology company, has been perhaps the most aggressive in this transformation, reducing its focus on building its own hardware and software to the point where it now depends on services for most of its revenue.