The announcement made a huge splash in the tech and general press. Many commentators saw the move as Microsoft's reaction to current and planned services from Yahoo! and Google. Others observed that other firms are successfully marketing Web-based services. John Blossom, president of Shore Communications, gives the example of salesforce.com, which offers online customer relationship management (CRM) tools at rates as low as $65 per month. Blossom observed: "While largely a rehash of existing capabilities, it's a market positioning which sends clear signals that Microsoft intends to makes a splash in the Software as a Service (SaaS) space that will keep up with its competition. Performance concerns will dictate the necessity of desktop software for many years to come in specialized applications, but content vendors need to recognize that the SaaS movement is here to stay and is shifting software providers into a much more direct competitive stance with their own solutions."

Clearly the Windows Live announcement represents a more mature basket of technologies than Office Live. At http://ideas.live.com, you can try out several beta tools:

• Live.com: a user-configurable Web-based portal that can incorporate RSS and other feeds
• Windows Live Safety Center: a service to scan your Windows computer for viruses or other malware
• Windows Live Favorites: a way to manage your list of favorite Web sites over the Web, including importing your Internet Explorer favorites list

"Coming soon" are beta versions of Windows Live Messenger, the next generation of MSN Messenger; Windows Live Search Mobile, a way to integrate search results with your mobile device; and Windows Live OneCare, a remote scheduled virus-scanning service. Microsoft says that Windows Live will offer social networking tools and will incorporate MSN Spaces.

In contrast to Windows Live, which already offers at least some functioning products—albeit all labeled "beta"—the Office Live announcement can only be characterized as vaporware. Other than the descriptions offered with the press release, there are no demonstration applications available to the public. (Microsoft officials demonstrated some Office Live applications at the press conference, and some screen shots have made their way onto the blogosphere.)

At http://www.microsoft.com/office/officelive, the company states: "A beta version of Microsoft Office Live will launch in early 2006." A link offers the visitor the option to "Register today," but at the end of registration one is warned that the beta trial may not include all registrants.

The lack of working Office Live applications has led to a great deal of confusion in the press and on the blogosphere. Many assume that Microsoft has announced Web-based versions of Excel and Word. If one reads Microsoft's announcements carefully, it becomes clear that, at least for now and the near future, Office Live is something very different:

• A professional Web site, expertly hosted by Microsoft
• A secure online workspace for organizing and managing customer and business information
• A complete set of tools for managing time, tasks, projects, and company data that integrates with your existing Microsoft Office programs

Thus, at least initially, Office Live is a set of services to help integrate workgroups of users and to help them share information in desktop versions of Word, Excel, and other applications. You could think of Office Live as a Microsoft-hosted service like Microsoft's Sharepoint product. (Indeed, Microsoft says that Office Live is based in part on Sharepoint.) The target market is small businesses who can't afford to run complex server farms but need Sharepoint-like collaboration tools.

For months, many have speculated that Google would soon announce an Office-like suite that operates over the Web, leveraging the Ajax technology that Google pioneered with Gmail. (Ajax is a term that describes Web applications that use JavaScript to deliver a much higher level of interactivity than traditional Web-form-based applications.) It will be interesting to see if Google lives up to these predictions and, if so, whether Microsoft responds with Web-based versions of Excel, Word, and the rest.

Should Google or Microsoft seek to offer a Web-based alternative to running Office on the desktop, some urge caution. Charles Severance, chief architect of the Sakai Project, told me: "Microsoft's move into Web-based applications is no doubt driven by the threat that Google will soon make a similar announcement. But seeing this is not a stunning revelation of the future, such as the first day you saw the Mosaic browser. Running Word or Excel over the Web may be useful in a pinch, but the world will not quickly abandon desktop applications. Google proved a lot with Gmail and Ajax, but rich desktop applications are still preferable for people doing real work many hours per day."

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It also will be interesting to see how many Live technologies Microsoft builds versus how many it acquires. Two days after the Live press event, Microsoft announced its acquisition of FolderShare, a "service [that] saves customers the hassle of sending large files via e-mail, burning them to CDs or DVDs and mailing them, or uploading them to a Web site." The Windows Live logo immediately appeared on the http://www.foldershare.com Web site. Another acquisition was the live.com domain name, which from 1998 until late 2004 belonged to an Internet streaming technology site in Mountain View, Calif.

The revenue models for Windows Live and Office Live are not totally clear. Most of the Windows Live and Office Live services will probably be supported by advertising. Microsoft says that Office Live will come in tiers, with Office Live Basics providing a free bundle of services including a domain name, a hosted Web site with 30 megabytes of storage, 5 e-mail accounts, and Web editor and log analysis tools. The company also promises Office Live Essentials and Office Live Collaboration. The latter will be "affordable," which one presumes to mean "for fee."

Incidentally, it's not the first time that Microsoft has embraced the word "Live" to describe its online service offerings. On July 24, 2003, Microsoft announced that its Real-Time Collaboration Business Unit had added "Live" to its product names, "communicating the value of the solutions for customers—live communication across and between global companies."