My initial impressions of the "big" Microsoft announcement today of Windows Live and Office Live - otherwise known as Microsoft Web 2.0 - is "Sure, it makes complete sense but what took you so long?" I mean, integrating Windows and Office (the rulers of the Old Desktop) with the Internet (the New Desktop) is a no-brainer. If you own the Old Desktop experience, why not use it to establish a major New Desktop foothold? The question facing Microsoft is whether Live is enough of a strategic play to slow down Google's momentum and/or enhance its own online presence. As Google demonstrates the ability to launch dozens of free services, does Microsoft have the room and appetite to migrate its core desktop applications online without sacrificing sales and profits? Google has a huge advantage because offering free service provides it with more territory for AdSense sales. For Microsoft Live to be a big successful, Bill Gates and Ray Ozzie must take the online plunge in a major way and offer software as a service in a seamless and easy-to-use fashion. So far, it looks like stage one of this process is making the strategic commitment and reshuffling the deck chairs. What will be interesting is how well Microsoft will implement Live in the future. This is a huge move for Gates Corp. because it reflects a shift in how Office and Windows are positioned in relation to the Web and, more important, is the first tangible sign of Microsoft's commitment to its software as a service strategy.
Ross Mayfield has some good insight into the third coming of Microsoft, describing it as a massive break from the past.