Ballmer said the shift to online software and services will mean changes for all of Microsoft's businesses, which range from desktop productivity tools to database and e-mail server software.

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Customers will soon have the choice of running Microsoft's business programs, such as its mail-server software, Exchange, on their own computers or in the cloud.

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But the company's software products, including Sun Internet Mail Server and Directory Server, have not sold as well as Netscape's comparable products.

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