"From Microsoft's perspective, that's much more significant than the whole search thing," Rosoff said. Search and online advertising revenue is "the future," he said, but Microsoft stands to gain much more from its enterprise customers that buy hosted services in the near term.

As the year closes, Microsoft's future in search isn't looking too promising. A comScore Networks report on online search market share in November gives Microsoft's Live Search 8.3 percent -- matching a low for the year the company also hit in August -- while Google had a commanding 63.5 percent of online searches. A deal for Microsoft to purchase either Yahoo's search business or the entire company also is still up in the air and widely rumored to be in the works as the end of 2008 approaches.

Hosted business services, however, is an area where Microsoft has an edge over Google, since Microsoft already owns many of the enterprise customers that would purchase them. Google has a tougher play with its own hosted business productivity services, since it has not proven yet it can compete in the enterprise market and does not have years of a successful software business to back it up.

Individually, Microsoft is now selling hosted Exchange Online for US$10 per user, per month and SharePoint Online for $7.25 per user, per month. When they are available, Office Communications Online will cost $2.50 per user, per month; and Office Live Meeting Online will cost $4.50 per user, per month. Early next year Microsoft also will offer a suite of all of these services for $15 per user, per month.

Though it's too soon to tell how many of Microsoft's enterprise customers will switch from buying packaged software from Microsoft to embrace this new model, at least the company is positioning itself for what many believe is the next significant phase of enterprise IT, software as a service, or SaaS.