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But in the large business market this may well succeed. Businesses are accustomed to budgeting and depreciation and all sorts of accounting practices that people don't have to do at home.

Businesses assume that it costs X dollars a month for a computer, and as long as the subscription costs fits in nicely with whatever cycle they buy upgrades on, they won't mind the rent/buy dichotomy.

Maybe. It's certainly true that business operate on a much different and much more complex accounting and budgeting framework than households, and maybe monthly/yearly payments for software better fit into the whole budgeting/life-cycle/depreciation system. But I rather suspect not.

Businesses are much more concerned with reliability than with novelty. Businesses are also very concerned about having control over where, when, and on what their money is spent. A CIO may buy something like MS Office figuring on a three-year lifecycle, but then realize that there's nothing to be gained by upgrading. Thus running the software longer than the three-year term originally planned represents a savings, and money in the budget for other things.

If this were not the case, most businesses would be running MS Vista and MS Office 2007. In fact very few are, and a significant number of businesses still have a significant number of MS Windows 2000 machines running.

The fact is that a word processor/spreadsheet package is much more like a typewriter than like a telephone line. It's a product that you buy and create documents with, not a service that needs the constant attention and maintenance like a phone network with a huge company behind it. And no business would welcome the possibility of being held hostage by one of their vendors. It's becoming increasingly clear that while applications may be proprietary, there is no reason for data formats to be. It's worth paying for a product for the features it delivers, but not worth the liability if what you create is worthless outside of the application.

I tend to think instead that this move by MS is fairly insignificant play in what is becoming a very significant battle that will determine the future of the company. They're being forced to shift the whole direction of the firm into an area where they have never had any success, and in which there are already very formidable players.

This isn't about software subscriptions, it's about hosted services. MS has seen the future and doesn't like what it sees -- systems, applications, databases, communications, etc all living on the network and available anywhere there is a connection (and in many cases where there is not), regardless of platform.

I work in a middling consultancy that is almost exclusively an MS shop, and I've already seen folks at my firm excited about the Salesforce/Google Apps pairing. We recently migrated our CRM system to Salesforce and the consultants we have on the road are very interested in the ability to review and edit contracts and proposals on the fly, from their Blackberries. They also really like the idea of how chat/mail/calendars can be integrated into particular account records without the clumsiness endemic to Outlook.

We've only just begun looking into an official use of the Google Apps, but there is much interest. I certainly think we'll be moving in this direction well before we start planning a Vista rollout, or even an Office 2007 rollout. And I don't believe that we are in a unique position.

MS is terrified of this because their entire existence depends upon the platform -- primarily Windows but also MS Office and the supporting systems that businesses require, like Exchange and MS SQL. Salesforce plus Google Apps chips away at the need for an MS platform, and certainly is a direct attack on the whole one-user/one-system model that MS has always used. I can get to my Saleforce account, company mail, company calendar, company documents, etc. from anywhere, on anyone's system.

Basically, if