"The Microsoft developments portend something that's been happening in the mobile computing world and in other parts of the IT world for quite a while," says Charles King, principal analyst with . "Consumers of IT have become more and more disassociated from packaged software. So much of the way that people engage with information via the computer has to do with information sources and applications and applets that are really very amorphous."

Less Bloat, More Web

Still, for a company that last released an operating system , the products represent an undeniable 180 degree turn in tactic. The age-old idea of buying a computer full of applications will be replaced by a philosophy of: "You want it? Come and get it." In Azure's case, the online reliance will be absolute -- but even in the setting of Windows 7, which will still depend on a locally-based core, the level of Internet integration is a step away from the package-defined OS we've come to know.

"It's critical for vendors like Microsoft to be ready for that and to find a way that they can continue to play and be relevant," King says.

Simpler and More Reliable