Wired on Friday Danny O'Brien

The result then was a wholesale reworking of every Microsoft project, and a raptor-like switch away from Microsoft's projects to embrace and extend the internet. As a result, and against expectations, a revitalised Microsoft managed to take down Netscape, win the browser wars and - according to Gates's threats at the time - save the company.

This time, the message isn't get the net. It's "Get Google". Of course, that's a gross simplification, but any description that wouldn't send you to sleep would have to be. Reading the public versions (available at http://www. hypercamp.org/ 2005/11/09#a43), one would hardly describe the new memo as a call to arms.

Instead, Gates's note is a brief, almost bland introduction to another deeper memo, 5000 words long, from Microsoft's relatively new CTO, Ray Ozzie. The Kremlinologists who monitor every Microsoft move have taken this to the anointing of Ozzie as Microsoft's new technical lead. But Ozzie's own words are less technical, and more broadly strategic. And, for those following recent developments on the internet, tremendously old. If this is the spark that lights the fire under Microsoft, it seems far more a damp squib than previous calls for all-hands on deck.

We missed out on search, Ozzie says, and we need to enter the market currently being gathered by Google. That market is not desktop applications, he says, but "internet services" - websites that provide single, dedicated functions for users or computer software.

What does that mean for the rest of us? For most users, the dividing line between application and internet service is mostly academic. Hotmail is a service, Word is not. Google is a service, Windows is not.

Technology apart, the rule of thumb is: internet services are free, and break when you're offline. Applications cost, and come with your computer.

The offline breakage of internet services was never more obvious than at the launch of Microsoft's high-publicity foray into the world of net services, last week. Called "Windows Live" and "Office Live", Gates and Ozzie introduced a bundle of experimental internet services that connected and co-operated with standard Window software. One observer called it "the worst demo ever", especially when the net connection went down halfway through.

But internet access grows more pervasive every month, and many of us now feel confident handing over much of our data to distance web servers.

The second catch requires a serious reorientation of the harder edges of Microsoft's philosophy. Making cash from the provision of free internet services is something that Microsoft has managed before (they crushed Netscape with the free Internet Explorer), but they have not yet managed to make Microsoft-level profits from free. Ozzie's memo emphasises the "power of the advertising-supported economic world" - with a eye on Google's $1.4 billion (€1.189 billion) per quarter revenues, and the difficulty even Microsoft would face introducing subscription services in the face of free-to-use competitors.

Living off advert sales is a tricky proposition however, and requires more than just the technical spinning-on-a-dime that Microsoft has excelled at.

In past revolutions, Microsoft has never needed to revamp its sales channels as thoroughly as its technologies. Indeed, as the company has grown, the Microsoft sales and marketing wing has remained reassuringly constant, acquiring and holding the company's chief customers using all the traditional (and conformist) tricks of the IT sales teams' trade. Like its major competitor, Oracle, there is a powerful argument to make that it's the determination and aggressiveness of Microsoft sales which really lies in the heart of the company - and no more so than now, when Steve Ballmer, the definitive hard salesman of Redmond, is in charge. It's not that augmenting that sales drive with advertising will be impossible. But in these turnarounds, the suggestion is that Microsoft should actively attempt to transform itself into an advertising-led organisation.

This battle has been fought before, and Microsoft still bears the scars. When that first internet tidal wave hit, many in the organisation felt it was time to switch revenue models. At the very least, they felt, the dependence on selling copies of Windows and Office would falter quickly. Not only did Microsoft have to change technologies, but it would have to look for new revenue streams. The culture war that broke out in Microsoft over whether Office and Windows were dying cash cows was vicious. It never ended, despite, 10 years on, those two products still pulling in the majority of Microsoft's revenue.

At the same time, Microsoft has seen off many competitors who believed that there were other ways to make billions of dollars from software other than by selling millions of hundred dollar, shrink-wrapped products.

These new memos smack of the idealism that the company was able to cut through like butter during the dotcom boom and bust.

This time, they know there's money to be made in these ideals, because they have a large, smart competitor making it. The question is: can Microsoft let go not just of its technical bias for the desktop, but also its grip on current revenue streams?