If you had any doubts about how far Microsoft is prepared to support the online application market, drop them. Microsoft is changing the company focus from locally installed applications to server-based applications.

On July 14, Microsoft announced the end of beta testing and a final pricing model for Office Online, which currently comprises Office 2000 running on a Windows terminal server that you can access over the Internet. Application service providers (ASPs) now have two models to choose from when they resell access to Microsoft Office 2000: If customers already own the licenses, they can transfer control to the ASP; if customers don't already have the licenses, the ASP can resell them access to the applications on either a per-CPU basis or a per-subscriber basis. The announcement doesn't specify a predictable price for application selling because the cost will be part of an application-serving package. It makes the most sense for ASPs to sell application access packaged with online access, data storage and protection, and any other value-added services that the ASPs can dream up, such as online training. With that kind of packaging, it's hard to get a firm handle on just how much consumers and businesses will have to pay to get to their applications online. Most likely, it will cost more than it costs to load those same applications locally, but when you're cost accounting, be sure to take into account the storage management the ASP is handling for you.

What does the end of the beta licensing period signify for Microsoft's commitment to the ASP market? According to Dwight Krossa, Microsoft's director of product marketing, the new licensing model supplements existing licensing models rather than replacing them. In other words, this announcement doesn't mean that you can't buy Office off the shelf at your favorite office supply store. However, Microsoft seems to be betting on the success of the ASP model. Microsoft. NET is useless without online applications because mobility—and not being tied to a single location or device—is crucial to the concept. This approach marks a dramatic change in the core Microsoft mindset; since the beginning, Microsoft has strongly tied itself to the PC and end-user control over the environment. DOS and Windows are the quintessential client-side OSs for a power-to-the-people computing mindset. But now Microsoft is joining the crowd who says that "power to the people" is not local control but "anywhere, anytime" computing.

It's a curious change. As those who read my thin-client columns or Thin-Client UPDATE know, Microsoft's commitment to the terminal service market has underwhelmed me. Less than a year ago, I heard from insiders in Microsoft's terminal services division that it was hard to get the higher-ups very interested in terminal services, and anyone who's had to maintain terminal servers knows that the service packs for Windows Terminal Services (WTS) lagged months behind the same service packs for single-user Windows NT. Now, although inhouse terminal services still aren't all that sexy, applications accessible via the Internet apparently are. I'm not complaining, but I will be interested to see how a company that has pushed the local installation model for so long, and until recently only grudgingly supported its own terminal services products, evolves to server-side computing, via either Office Online or Microsoft. NET.