Microsoft is going after the small end of the market where the companies do not want or have the resources to manage a full blown business system.
Within the next year, Microsoft is likely to offer hosted implementations of its customer-relationship management (CRM) and enterprise-resource planning (ERP) applications, as well its SharePoint products.
Although the company has not given details on the plan, Microsoft chairman Bill Gates has noted that some of the software giant's partners already are doing hosted SharePoint, and that a scheme to widen that usage is in place.
Analysts expect the company to move into hosted CRM and ERP soon. The market for hosted services for those applications currently is driven by vendors like Salesforce.com and RightNow Technologies .
During upcoming talks in San Francisco, Gates and one of Microsoft's CTOs, Ray Ozzie, are scheduled to speak at greater length about the company's software-as-service plans.
Although specific details on Microsoft's hosting push have yet to be unveiled, analysts are expecting that the company's strategy will target a range of users with a special emphasis on smaller companies that do not have an I.T. staff.
Also a possibility for the company is outsourced e-mail services. Because of the surge of spam and e-mail-delivered threats, companies have been more focused on how to protect their e-mail through filters.
If Microsoft can implement an e-mail service that takes the burden for such screenings off company I.T. departments, it could find wide adoption.
The move into hosted services could draw more small businesses to Microsoft, especially in the CRM arena, noted AMR Research analyst Rob Bois.
"Small to midsize companies are looking more closely at hosted services for strategies like CRM and ERP," he said. "It makes sense that they would because they can tap in to these applications without having a large, upfront expenditure."
Hosted services in general have been looking more attractive to SMBs, Bois noted, because companies still are keeping their staff numbers low to avoid another dot-bomb scenario.
"Outsourcing, whether you're talking about consultants or services, has become much more accepted and mainstream," he said. Microsoft's move in that direction would be a driver for the hosted market, but it would also be an indication of the direction the industry is already headed.