Microsoft has been the 800 pound gorilla in software for two decades, but Google is clearly gaining weight and Microsoft's latest product announcement indicates that Bill Gates is ready to challenge Google on its home turf: The Internets.

Outlining what it said was its biggest strategy change in five years, the Redmond, Washington-based company told analysts and reporters on Tuesday that it would deliver many of its key products and services online, some supported by advertising, as well as by selling subscriptions or licenses for software installed on computers.

Windows Live and Office Live will give users some of the basic features of the software giant's two most-profitable products, but without the complexity of installing and maintaining the software in computer hard drives.

"We are trying to put a 'services plus software' mentality into many many of the product groups inside Microsoft," said Bill Gates, Microsoft's chairman and chief software architect.

TechCrunch.com has lots of details about Windows Live, which they describe as "more than an AJAX desktop.":

Microsoft has added plenty of new features that add a lot of value to the product. Among them are email integration, a new instant messaging client, and skype-like features that allow outgoing calls to normal POTS phones. Windows Live is also extensible via “gadgets”. After what I saw today, I despair for many a silicon valley startup. Seriously.

Love or hate them, Microsoft has definitely shaken things up with this announcement.

This Microsoft service competes with Salesforce, which has hundreds of companies developing custom applications and sharing them with others over a similar small-business system.

Salesforce Chief Executive Marc Benioff dismissed the moves, saying that Microsoft's relevance was waning a decade after Gates declared that the company's future lay with the Internet in a milestone strategy speech on December 7, 1995.

"The real innovators on the Internet: Amazon, eBay, Google, Salesforce.com -- have all succeeded because Microsoft has let us down on innovation," Benioff said.

In a related story, a 19 year-old Russian hacker calling himself "Kinta_Mast0rz" announced the release of "r00tkit L!v3. At a press conference in his mother's basement, flanked by posters of t.A.T.u. and Paris Hilton, the youth declared, "I pwn j00 Micr0soft L1vexxorz!"

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Well this is kind of off the topic but windows is about the crapiest* OS ever. I mean I finally get 60 gig's worth of software on my computer and what happens? I now have to reload my OS. I wish they had linux versions of games and turbo tax and all that other crap. I think im just going to burn it and start all over.

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Yes, it's very much off-topic. Don't do it again.

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Dont blame MicroSoft for your failure to back up your data.

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I think that Microsoft has enough money and resources that if they really wanted to compete in any market they could simply buy their way in. The difference between Google and Microsoft is time- Google is (still) new to the internet. Remember Yahoo? Yahoo was a trend. It faded out. It lost so much of its consumer base to Google. My prediction is that the same thing will happen here.

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Google isn't a fad. It's been around for awhile now and its shares are still increasing.

I'm a little confused. Are these programs going to run off a website instead of a program on the computer? That seems a bit pointless.

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I read for the latest issue of time magzine on an article about Google's company. lately they're growing and it seems like they're pretty stable. although alot of it does rely on luck, popularity and use of google was spread by mouth and if people suddenly decides to stop using it then the entire company will crash.

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