Wed - Microsoft's memos show fear of being left behind

Today the press is awash with leaks of Microsoft internal memo's showing that they are in fact etxremely concerned about the threat that the software services revolution could have on their business.

The software services revolution, they now recognize, has two terrifying potential implications for Microsofts current modus operandi. 1. Software is bought and used oiver the internet, not via CD's. 2. The software is often free - its the service that makes the money. Google of course are often cited as the almost perfect example. None of us pay to use Google's search software, or email service etc etc. They make money from the adverts they show us.

If you take software as services to its utlimate natural conclusion - which of course may never happen - then one could argue that all software will one day be free and either delivered by cyber software philanthropists and an open source style movement or bundled with a service.

And the software services revoltion is gathering intense momentum and creating huge franchises for at least Google and Yahoo. Microsoft's late to the game and will have to do a lot better than 'live.com!!' But Billie seems serious and Microsoft has little choice.

And Microsoft seems to be changing. One interesting development is that Ray Ozzie, a techie guru only brought into Microsoft recently and a big believer in online services (he invented Lotus Notes) is increasingly the voice of technology change and even strategy at Microsoft. So, can he with Billie and Stevie turn the Microsoft ship around fast enough? Probably, if they all push in the same direction and go like hell.

Either way, the software industry is in for one massive new change. We must at least thank Google and even Mr Ozzie for that.