If you can't beat Microsoft, make it obsolete.
Several industry analysts claimed that online services will bring Microsoft's downfall. Why install Office locally if you can access the application through a webbrowser? And the same goes for about every mainstream application.
Microsoft has its Live software initiative, but will face the age-old dilemma of having to market application that undermine its existing business. So far Microsoft Live has avoided this problem by announcing non-competing products, but it remains to be seen how successful those become.
Google has consumer mindshare, market share and the money needed to become the dominant player in the online application market. The company in March accidentally published notes that clearly indicated a strategy in this direction.
Hosted applications have been on the verge of a breakthrough for the past three years. We just keep waiting for the actual event.
Apple, by the way, too could profit from a breakthrough of hosted applications. While the trend will bode badly for the company's software business, only services allow consumers to purchase Apple's computers without having to worry about migrating their applications and data.
screenshot of Writely, an online word editor that Google acquired last March
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