In an undertaking Microsoft likens to NASA's first lunar landing, the company next month will unveil a "risky venture" to transform itself into a provider of software services delivered over the Internet.
The company will highlight a plan to further integrate its server software and development tools to create a platform that will enable Microsoft applications to be delivered as services over the Internet instead of in shrink-wrapped boxes.
The company plans to forge ahead with this plan despite being under the glare of the U.S. Department of Justice, which has concluded Microsoft's products are already too intertwined.
Critics are sceptical that the company can pull off what has been called its Next Generation Windows Services (NGWS) strategy, which Microsoft will unveil formally and rename 22 June.
In theory, companies would be able to integrate internal programs and data with services and information available on the Internet to create a rich interactive environment.
For example, an accountant creating a forecast could automatically incorporate economic and country data provided by Web-based software services into internal programs and planning projections.
E-commerce sites could benefit from reusable services, such as sales lead generators, for creating and customising their Web sites.
According to this new business model, Microsoft says the lines between Web sites and applications will blur, because some sites will actually be providing programming logic that can be called over the Internet by other applications.
The applications themselves will be built from standard components that can be stored and used anywhere on the Web.
Although Microsoft has been tight-lipped about NGWS, sources say the company won't introduce any new products - just modifications and enhancements to existing software that will be delivered in the next two to three years.
The glue for the entire initiative will be XML, and Microsoft will re-engineer its servers, development tools and software to drive XML into the core of all its products. XML is a set of tags that provide data about data so disparate programs can exchange information.
Microsoft also will add enhancements to its Visual Basic and Visual Studio development tools that allow users to create building blocks and assemble them into services and applications that can run on the Internet, enterprise servers and PCs.
Chairman and Chief Software Architect Bill Gates told Network World last month that the foundation of NGWS will be a common software architecture and single programming model.
Microsoft also is expected to develop a set of Internet-based services similar to Passport, its online electronic wallet service. The new services include billing, identity, personalisation and storage.