This article's author can be definite about the future because it is inevitable (he says):

"As access to the Internet has become ubiquitous, computer users have increasingly gone to the Web for what were once offline tasks. In the near-future, it will become more efficient to run an application, like a word processing program, off of a central network of computers rather than an individual hard drive. The concept is known as "cloud computing": Documents will begin and end their lives on a server rather than a personal computer, and users will be able to access their personal documents and favorite programs wherever they are with any networked device."

That "near-future" is not even a glimmering in the distance. Few people have heard of using online applications, and fewer still are interested in trying them. From later in the same article:

" A recent survey found that only 6 percent of respondents had tried Web-based office applications, and nearly three in four had never even heard of such a thing. By comparison, there are hundreds of millions of Microsoft Office users. Even though Google Docs has a head start on the Web, Microsoft is perhaps better positioned to win the race."

So, only 25% have heard of web-based office applications, and of those fewer than a quarter have tried them.

But these numbers have supposedly so terrified Microsoft that the company will surrender $ billions in profits sometime in the next week by turning the web into serious competition for Office on a pc. In order to keep up with Google, which has found no way to turn a significant profit on Google docs.

And why would Microsoft attempt to set a record for largest single financial loss from a stupid decision? Because people like the article's author have warned the company what it must do.

If you need reassurance, Microsoft is not that foolish. The net software will supplement the copy of Office on a pc, make use of the software more convenient where appropriate. And not attempt to replace everything Office does.

It's possible the article's author is tired of writing stories titled "Microsoft achieves highest profits in company history" year after year until now and perhaps for many years to come. And accepting his view would change the headline to "Microsoft follows my advice, loses big!" But the world would not be much better off in that case.

with the new cyber laws reaching internaional boundries and the very sick child porno a person in holland can now be sued by me if this comes up on a search for my no child left behind clcourses than I think this is a very wise move by microsoft. Yahoo and google are known for finding the most illegal sick porn sites when doing a search. Microsoft does the real search and gets the real internet sites for example mayo or american pediatrics . I am suprised when I show people this who are used to yahoo or aol. They simple have no ideas the wealth of real internet sites and great research for any company person or student. For example real advice to make a lot o f money in the stock marekts by the experts , real medical treatment to save a life of a child or spouse and real places to move to and buy houses and check out the community or beaches just by doing a search on msn best garocery stores prices, clothing stores shoes stores hari syles make up the list is endless. also by doing this microsoft can get rid of many hackers since these are their hookup sites yahoo and other interent places that goes through yahoo.

Outsourcing applications via the interent is much more than "a glimmer on the horizon". Salesforce.com essentially is the hosted/outsourced CRM system for Merrill Lynch - and since customer account data is the key to the Merrill kingdom, outsourcing it is a very big deal.

Similarly Microsoft Dynamics provides CRM, Bookkeeping and MRP systems via the web. Oracle has similar offerings.

Now these are essentially "hosted models". The next steps come with the capabilities such as the Internet Service Bus which Microsoft already has in "Tech Preview" (aka Alpha). Mix in their investment in Facebook to secure that as the next generation of Application Development, and the idea that applications running across the network are not even a glimmer yet, simply isn't supportable.

Microsoft is essentially looking to leapfrog the somewhat clumsy "web based office applications" and go straight to a completely new application development paradigm.

And by purchasing Yahoo!, Microsoft in one Swell Foop [sic]

• Expands its Internet Data Center capacity - in which they were looking to invest between $3bil-$10Bil over the next 5 years
• Hires itself a division of internet developers that would otherwise take a whole year of recruiting to fill
• Acquires a customer list of small businesses that are already buying web and other services from Yahoo!
• Acquires the #1 hosted email solution in the world

These are all very good reasons for MS to buy Yahoo! Heck the first one by itself knocks an immediate $10Bil cost savings off of Microsoft's deal cost. Which means MS is essentially getting Yahoo! for $34Bil or roughly $3bil under the current market cap.

That's pretty smart business if you ask me.

Microsoft is primarily a software company. It's very successful selling packages for use on the pc. A company like Salesforce.com is arguably showing the limits of a different model, rather than an approach Microsoft should emulate. And the Facebook investment is likely about a social site, rather than software.

All the efforts Microsoft is making about web applications should be considered both/and rather than either/or. By supplying tools, the company doesn't lose developers who do work online, but doesn't sacrifice the core of its business.

The "division of internet developers" Microsoft acquires with Yahoo is problematic. Yahoo has open source connections, isn't using Microsoft products extensively enough. I'll make a prediction: Yahoo will be on Microsoft software before too long.

It's always about the money. Change can be exciting, but if it can't be turned to ever-larger profits, the direction of the change will be diverted to Microsoft's benefit.

It very much IS about the money. But your analysis of Microsoft's business is inaccurate. While MS primarily focusses on softwrae applications, they have always seen "The Platform" as the key to keeping the profitability of their applications. By owning "the platform" Microsoft can build generic solutions and have a host of 3rd party devs enhance, customize and adapt those solutions to specific industries and niches, thus expanding the overall market for MS Products.

The Operating System used to be the critical platform, but over the last 10 years (pretty much since NT 4.0), the importance of the OS platform has been decreasing, while the browser as a platfomr has been increasing. That's why core Internet Explorer functionality has progressively been built into Microsoft Office since Office 2000 - to where now with Office 2007, connectivity is assumed as the default state.

With the advent of virtualization, application virtualization, terminal services and increased bandwidth, the importance of PC based applications is dramatically decreasing. Google has been experimenting with this with Google Apps. Now Microsoft isn't just going to give up its cash-cow franchise of Office, but the reality is that if you dig into MSFT's financial statements, you will see that revenue generated by Office is starting to plateau.

So Microsoft is looking for the next Platform. So the Facebook investment was not about the "social site" as much as it was about securing a popular application platform to be uniquely Microsoft (shutting out Java and Google dev environments).

You are right that it will take time for Microsoft to digest Yahoo! It took some 3-5 years for Microsoft to digest Hotmail and Yahoo! is a bigger meal than Hotmail! was.

OTOH, virtualization, provisioning and Data Center management technologies have also advanced dramatically That means that while migrating existing Yahoo! apps will take time, Integrating the operational IDCs into MS environments will go more smoothly than Hotmail did.

On the developer side, .NET takes about 3 mos for an open source developer to become proficient in. And after that they are about 5%-10% more productive. So within 18 mos you have retrained your devs and recouped your training costs.

I agree that the figures from the poll on Web-based word processing look highly underwhelming. But one of the joys of writing about technology -- and one of the reasons why it's so easy to be drastically wrong about things -- is that trends generally increase exponentially. (People often cite Moore's Law here, though the original formulation applied very specifically to the number of transistors on an integrated circuit.)

One precursor I watch out for is how people transfer and backup their information. I find, anecdotally, that people with gmail accounts, which are functionally limitless in storage space in most cases, increasingly email themselves files instead of using a flash drive. This seems to me to lead naturally, in time, to placing one's files on a network in the first place, particularly as the number of devices we use to access our information increases.

Until as many copies of online applications can be sold for the same price as Office, the internet will be subordinate to pc software for Microsoft. That approach continues to work well; the newest Office was delivered on time with sales exceeding expectations. Your statement that Office has been plateauing seems in contradiction to fact.

There's a reason the person now in charge of Windows has Office experience. And that, despite loud predictions, there will be another "big bang" Windows upgrade in a few years. That reason is: people and organizations pay for new versions Windows. Beyond what would be expected from normal hardware replacement cycles and despite the decline in retail purchases.

Microsoft doesn't sell only that the software does what it did better. Instead, the company adds functionality to the operating system that had been considered applications. And those additions are not just bolted on; like Internet Explorer and Media Player, they're part of the operating system code.

And when Microsoft adds functionality, it also adds capabilities. Because almost everyone uses Windows, developers can assume capabilities are going to be present on users' machines and use them to make their own applications easier to write and more saleable.

Consider that when the EC ordered Microsoft to remove the capabilities for a special version of XP in order to benefit RealPlayer, the first company to complain was... Real. The reason? RealPlayer used the same capabilities as Media Player. Internet Explorer and Media Player as the user sees them can be considered only interfaces, easily replaced without changing the underlying code.

With the increase in tools as well, Microsoft is attempting to provide a platform useful for every purpose. With the advantage of the best possible connection to Windows and Office. On the pc. If you speak of the importance of the browser as a platform, you're speaking of Internet Explorer and thus of Windows. Instead of the browser replacing the operating system, the operating system is replacing the browser.

For Microsoft, it's a good strategy retaining developer loyalty and user sales at the same time. When developers write for Windows because everyone uses it and Windows is purchased by everyone because of the developers' products, that's called the network effect. It's a good way to grow a new industry, though whether it still is good is a different question.

In brief (I know, too late.), Microsoft will make use of any new technology to increase use of its products, current and future, based on maximizing profits. Any competing model will have to defeat not just directly comparable software, but Microsoft's whole product list. That's not easy.

Nah, the reason Jeff is in charge of Windows is because Gates is leaving and he and Steve are putting their trusted leuitenants in charge of the keys to the palace. There were two otherr candidate who had been groomed for that position but each of them flamed out (one went to Amazon).

And no, the OS is not replacing the browser. In particular new virtualization capabilities like Softgrid, are making the OS somewhat less relevant.

Two main reasons left to revamp the OS:

1. Moving to a true "deserialized" database as the file store
2. implementing some of the core "blackbox" provisions necessary for "trustworthy computing".

Microsoft has always been willing to invest heavily in marketing the current version while "doubling down" on multiple future paths. Buying Yahoo is primarily the latter.

Beware of anecdotes. One problem: When my children were small and were frightened by a news story on television, I told them that the reason it's news is that it's rare. No one recounts using an ordinary pc without problems; you'll hear about the new and rare.

Also, you identify a means of accessing files. Microsoft has a number of ways to assist access, and gmail seems unlikely to be a direct threat. Would you rather see a movie on your cell phone or the big screen television you paid for?

It's easy to be drastically wrong about a new trend just before nothing happens verrry slooowllyy.

Gmail is seen by Microsoft very much as a threat - exactly as described. Trust me on this one - I cannot cite the source in this forum, but trust me on this one (no I'm not an MS employee, but I know a fair number of pretty senior ones).

As for where you would rather see a movie- it depends on the movie and the person. Millenials are perfectly content to watch serialized TV episodes on their iPod/Xune/Zen/iRiver while riding the bus, sitting in a car or zoning out in the back of a lecture hall. And these devices have enough compute power to be able to drive that larger screen through the proxy of a laptop.

The distinction you make is rapidly going away.

"No one recounts using an ordinary pc without problems" is right - but not because a problem-plagued pc is rare or new. It's because PC users have gotten used to all the crap they have to deal with - all the extra money paid every year on firewall/virus/registry cleaner/etc to cover over the OS's weaknesses, BSODs, etc etc... I have never had a PC that did not regularly have these issues. And a large part of the problems are due to Microsoft's bloated and inefficient OS.

And THIS is the reason why I am concerned about Microsoft getting Yahoo - it simply means more crappiness.

Oh please, have you ever tried running Linux? SunOS? BeOS?

Every single one of them has patch and security issues and BSODs. In fact there is a chance that Sadam Hussein escaped being hit by a cruise missile because the fire-control computer on the Missile Cruiser tasked with launching the cruise missile crashed, and instead the launch sequence had to be taken over by another vessel - and Hussein missed being in that bunker by minutes.

All software is crappy