"We're in a transition to software that is live. It will be click to run, like a Web site," said Ballmer. "We believe in evolving to click to run."

Windows Live is a growing collection of service add-ons for Windows. Some of the services are shipping, such as Windows Live Messenger and Windows Live Expo online classifieds. Nearly a dozen services are currently in beta test on the Windows Live Ideas Web site.

Resource Library:

"The most important thing is the Live platform. The next level of consumerization is coming from Internet services and Internet delivery," said Ballmer, whose comments dovetailed with a theme espoused by Gartner analysts at this year's conference: that consumer technologies such as search, podcasting, on-demand video and blogging will seep into enterprise IT infrastructures in the years ahead.

Gartner analysts say consumer technology will overtake corporations. Click here to read more.

Ballmer said the move to an online experience for the user does not diminish the need for powerful client systems, which are the bread-and-butter of Microsoft's software business.

Gartner analysts posed questions to Ballmer on a number of topics, particularly the forthcoming Vista release of Windows. Ballmer said the lesson his company has learned from the repeated delays that have plagued the release of Vista, once known as "Longhorn," is the need to reduce complexity in the development process.

"We learned we have to innovate and integrate, but not necessarily at the same time. There was too much new invention to be integrated," he said.

In the area of enterprise applications, Ballmer noted that Microsoft is working to release a hosted CRM (customer relationship management) service. He also said Microsoft is working on a common code base for the ERP (enterprise resource planning) products in the company's Dynamics product line—essentially what had been called "Project Green" a couple of years ago.

Ballmer also stressed that Microsoft will continue to invest in multiple core businesses: entertainment, online, enterprise and desktop. In addition, he touted the company's legendary tenacity if success does not come quickly. "The bone doesn't fall out of our mouth easily. We keep coming and coming and coming and coming and coming and coming."

Check out eWEEK.com's for Microsoft and Windows news, views and analysis.