Microsoft has announced their entry into "Live" software through the release of windows live and office live. This should allow them to explore new business models. One strategy would be give away basic functionality and charge for premium functions like Eudora or Adobe. The other option is to subsidize products through advertising, as done by Google. The third idea would be to let developers innovate on the platform and release new products to the market. Microsoft can then wait to see which one of these product actually find traction with users and then decide how to charge for it.
These options (mainly two and three) are enabled by the fact that the API control is dynamic. In the old PC model, Microsoft controlled APIs by allowing selective access to developers to build products that work on top of the Windows platform. In addition, changes to the API set were made during every release cycle. This typically took anywhere from two to five years.The list of functions that were enabled for API-based access was determined by Microsoft and this was done prior to user feedback. In the new Internet-based model, developers make their request for API access as and when they find the need and the platform provider gives them access. This is a very inductive and user driven way of releasing APIs. While this is similar to Google, Amazon, eBay and Yahoo, the major question facing Microsoft is the following -- is the organization ready to implement their new technology strategy? Given their prior success with the current structure and established practices, can they adapt to the new model? Only time will tell... .