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Bill Gates hinted that Microsoft would launch simple online versions of some of its Office desktop software tools as he hit back at suggestions that new internet services from Google and others might start to eat into one of his company’s core businesses.

His comments followed a rash of new services from Google and other internet companies to handle things such as word processing, spreadsheets and online calendars.

Google also changed course last month by starting to combine some of these its applications into an integrated package, echoing the “suite” approach that helped to turn Microsoft’s Office into the dominant desktop software application.

Mr Gates told the Financial Times that Microsoft would itself match services such as those offered by Google. He argued strongly, though, that this would only ever represent a small part of the market.

Asked whether Microsoft planned to launch online “productivity” tools like those in Office, he said: “We’re going to cover 100 per cent of the productivity needs – our track record is to keep innovating.”

Mr Gates said the present generation of e-tools were still at a very basic level
and broadly comparable to Works, a collection of simple applications that Microsoft sells for PC users, and so did not threaten the core Office business.

“The web-based things aren’t an advance over what Works has been for a long, long time,” he said. “We don’t think the market will shift to a Works-like level.” Works is only estimated to account for a small percentage of Microsoft’s “information worker” business, which produced overall sales of $12.4bn last year.

Until now, Microsoft has steered clear of launching web-based productivity applications in direct competition with Google.

Its “Office Live” service, which is due to come out of its test phase later this month, is a collection of tools for small companies to create and run their own websites, rather than being related to the desktop software suite whose name it bears. While maintaining that most office workers would continue to use full versions of the Office desktop software, Mr Gates suggested that they would in future find it easier to access their work from any machine – one of the advantages of the online services.

“There’s a difference between actually running an application on a server versus letting a document be found on a server,” he said. “We’re going to make a push to let you keep documents on a server.”

Since most office workers use full-functioning PCs, it made sense to take advantage of that local computing power with applications such as those in Office, even if their documents are held centrally, he added.

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