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WPC Steve Ballmer has promised Microsoft will take the lead in online software and services through a middle-of-the-road approach, while talking swipes at technology luddites and evangelical extremists.

In the strongest endorsement to date by the business side of Microsoft for chief software architect Ray Ozzie's idea of "software plus service", Ballmer tried to offset partner doubts in moving to online offerings and over the maturity of patchy offerings like Office Live.

Choosing his words carefully, and stopping short of calling those "naive" who believed client-based computing would give way to Web 2.0 ideas like software as a service (SaaS), Ballmer told Worldwide Partner Conference delegates: "Some talk about software as a service... that has certain implications that I don't think are right."

According to Ballmer, users will continue to flock to the client's rich user interface, offline and online capabilities, and "personal integration". "Two hundred million desktops are sold a year to people who don't want to give up the benefit of desktop," Ballmer said.

Referencing Apple's recently launched iPhone and its closed-off operating system as an example of the enduring power of client-based computing, Ballmer said: "Mobile devices are getting richer, not getting smaller and thinner. We and Apple would agree on this... the world is not moving to a thin browser."

However, he also dismissed online service naysayers as "troglodytes". Referring to the evergreen reports of the mainframe's death, Ballmer noted the mainframe lives, and has evolved. "For my 27 years at Microsoft, we've been saying the mainframe will go way, but it hasn't - it's still going away. The model will evolve."

According to Ballmer, the next-generation model of computing will be a "superset of where we are today." That will combine client- and device-based computing power with online applications and storage, and a managed server infrastructure.

Microsoft's chief executive pointed to upcoming Microsoft hosted collaboration services as something partners can resell, and called Outlook and Exchange good examples of software with a hosted, AJAX service. He did not say when Microsoft's hosted collaboration service would launch.

Ballmer encouraged partners to begin by reselling hosted Exchange services such as email security. "We will want you to resell those services and partner with those people who host those services," Ballmer said.

He made it clear that services are coming, and Microsoft's partners must adapt. "This affects the ISVs in the room and should be important to you, it affects the SIs in the room, the hosters in the room the resellers in the room... everyone is welcome. The fundamental transformation to software plus service that's happening in the model of computational and the user interface is upon is," Ballmer said.

"I guarantee you Microsoft will lead during this next generation of computing and user interface as we have the last couple of generations of computing and user interface," Ballmer said. "We will be out there with betas, previews and feedback," Ballmer promised. "It's time to engage. The customer aspect is already in progress."

Even Ballmer, though, couldn't disguise the fact that much of the buzz for SaaS and ondemand is around the consumer, with the majority of businesses moving very slowly. He conceded different markets are moving at difference speeds, with small, mid-market and enterprise customer uptake lagging consumers.

"In small business, the technology is starting and customer receptivity is there. We are seeing a little lift off. Enterprises are planning. Many I talk to are saying they going with the new Exchange and SharePoint and Office because they know we will move those things to a hosted service."®

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