As the web increasingly becomes a platform for creating, distributing and running applications, bypassing a role often played by Windows, Microsoft is adapting to the change and sees opportunities, not threats, Microsoft executives said yesterday at the WEB 2.0 Conference in San Francisco.

"It's a really interesting time. If you talk to most of the people who are in positions of defining strategy within the company... you'll find there's a fairly uniform belief that now we're at one of those times when things are significantly changing," said Ray Ozzie, a chief technical officer at Microsoft. "Almost every aspect of what drives the business is changing in some way, shape or form."

In flux are the models used to build systems, the reasons for building them and the manner in which they are built, said Ozzie, who along with two other Microsoft executives fielded questions from conference chair John Battelle and from conference host Tim O'Reilly.

Microsoft's recent reorganisation and the increased emphasis on internet technologies being developed in its MSN unit are reactions to the changing computing landscape, said Yusuf Mehdi, senior vice president of MSN Information Services.

"The reorganisation is a recognition that web services and some of the things we've started doing in MSN are going to be more central not just to MSN but to all of the software we build at the company," Mehdi said.

He discounted Battelle's suggestion that Microsoft's revenue might suffer from the rise of the web platform, which he said imperils the business model of selling packaged software products such as Windows and Office.

For one, Microsoft stands to profit as an enabler of web services, Mehdi said. "We're definitely a big believer in the business opportunity of web services, whether that's done through online advertising or transactions or what have you. The growth in that market ... is huge" and Microsoft is positioned to take advantage of the opportunity, he said.

Meanwhile, Windows and Office will also be part of the web services dynamic as they are adapted accordingly, he added.

Moreover, it's wrong to think that, for example, Office in its entirety will be migrated to the web, Ozzie said. Some applications lend themselves to a web treatment, such as email, while others don't, he said.

"What customers are trying to get is a really good user experience for what they're trying to accomplish. For some things – mail is a great example – the web is actually a good mechanism for accomplishing what we might not have in the beginning envisioned might be possible. So some of those things are going to find their way out," he said.

But other applications that are very rich in functionality may not be good candidates for that. "I'm not a big believer that things are going to go all the way one way or all the way the other way," Ozzie said. "Office will change because of the presence of the internet and its capabilities, but it will be [gradual]."

With Office, Microsoft will steadily try to understand what functionality can be offered via a web browser and what requires richer client-side software, Ozzie said.