Microsoft plans to make most of its Office software - including Word and Excel - available online.
Web-hosted apps, also known as 'Software-as-a-Service' (SaaS), allow users to benefit from lower initial prices for the programs, as the apps are hosted online and don't need to be downloaded to computers.
Stephen Elop, president of Microsoft's business division, told Reuters: "What we think is in five years, 50 percent of the use of Exchange and Sharepoint could be serviced from the cloud."
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"Between now and then, a year or two or whatever, if it's going to be tough economic times, that means we expect quite a lot of movement in that direction, a lot of people taking advantage of that," he added.
"I think the economy will help it."
Microsoft's online offerings will directly compete with Google's web-services such as Google Docs, as well as Google Calendar, Gmailemail and instant messaging.
Microsoft wouldn't confirm exactly which services would be made available on the web but revealed they would be rolled out as early as 2009.
See also: Microsoft to trial web-streamed Office suite