• CNET News.com, Tuesday, May 1, 2007 10:31 AM

Never mind the ad-business (for now). The big Web opportunity is Web-based software and services, says Microsoft's chief software architect. Look no further than the recent action of Microsoft competitors like Adobe Systems, producer of Flash, Apple and even online auctioneer eBay. All are starting to build desktop services like gadgets and applets and browser plug-ins to complement Web services.

Ozzie says the key to Microsoft's future lies in ad-supported programs like Silverlight Streaming, a service that lets users store and stream video clips into Web pages free. It's a tool for consumers and software developers alike: Net developers, which make cross-platform browser plug-ins, can build applications using Silverlight. It's also open-source, which is a huge departure for a company that's built its empire on proprietary services.

Detractors might say that Microsoft missed the Web ad boat by sticking with its massive software business, but the company's impressive first-quarter numbers back up that decision. Thanks to old standbys like the latest iterations of its Windows operating system and Microsoft Office Suite, Microsoft delivered a record $5.96 billion in net income. Itlooks like Microsoft will stick to transitioning its core business, and add the ads later.

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