Microsoft is making a 'big bold bet' on Web services, which it sees as the most important technological development of the next decade, CEO Steve Ballmer, quoted by a Reuters report said.
But the software company, whose online division is losing money while rivals like Google thrive, has a unique vision of how these new services will evolve, the Reuters report said.
Microsoft believes Web services will work in tandem with PC-installed software, a vision that differs from that of 'software as a service' advocates, such as Salesforce.com and Google, who expect services delivered over the Web to replace traditional software.
'We believe this shift is the most important technological transformation during the next decade,' Ballmer was quoted as saying.
Microsoft has invested heavily to expand data centers to house servers and provide the infrastructure to host blogs, email services for small businesses and a slew of other new Web services as part of its 'Live' strategy, the Reuters report said.
Calling Microsoft a company with multiple core businesses, Ballmer said its online services group is the software giant's 'fourth core' in addition to desktop software, computer server software and its entertainment initiatives.
'As we look to the future, this fourth core represents our big bold bet on the shift to software plus online services,' he said.
Google has already encroached on Microsoft's Office desktop turf with online spreadsheet and word processing software, while Microsoft's own Office Live lets small businesses set up Web sites, company-branded email and Web applications.