So what are we looking at in terms of the next rev of these products [SQL Server, Visual Studio, and BizTalk]? Short. Its short Whether that winds up being more like one year or more like two years, well have these products turning much more rapidly. And the teams know that.I mean with the launch of these products Im not going to get into whats in the next releases and blah-blah-blah-blah. But were definitely committed to a much closer cycle timenot just for the next release but from here on out.Do you think the industry is moving away from an economic model based on selling software licenses to alternatives such as software as a servicelike your Office Live, and subscription-based services like Red Hat? Well, I think youre going to have all three models. Youre going to have what we call the transaction model where you sell something. Therell be a subscription model where you pay for something as you use it. And therell some things that will be funded via advertising or essentially as part of a bigger idea. I mean what are we doing with our Express editions? The fact that theyre available for free download doesnt mean that weve given up being a profit-making company. But we do recognize that theres just a budget limitation students have and yet we want to create a funnel so that over time some percentage of those people, themselves or the companies they work for, wind up buying a full Visual Studio, a full SQL Server. Click here to read more about Microsofts Office Live. So I think youre going to see a variety of business models, and were embracing all of them. We grew up certainly on the transaction business model. But what we really talked about last week is were going to have a variety of things we do that are ad-funded and a variety of things we do that are subscription-funded. But how much weight do you see you placing on each, how much can you get out of them? Well, we already sell almost $2 billion a year advertising, so I cant tell you its small. And depending on how you look at some of our enterprise agreements, a number of those are kind of subscription-based, so its hard for me to tell you thats small. I think theres a lot of economic promise in all three for different scenarios. Each has its own place. Do I actually think ad funding is going to be the primary source of revenue for mission-critical applications? No, I dont think so. I think thats still going to be either transaction-, or perhaps some time in the future, more subscription-oriented revenue. Will there be an equivalent or similar "Live" strategy for tools? When theres something to say on that, of course youll be the first to know. [Laughter] But I think its probably fair to assume that were working on a "Live" strategy for every part of the product line. We talked about Windows and Office and Xbox last week, but let your mind run wild. Read more here about Xbox. You said Visual Studio, SQL Server and BizTalk make up the Microsoft application platform; how do you see that platform competing with the competition? Those are core components; I also tried to show Office and Windows Well, who would we call competitors, because everybodys got their own view? Oracle competes with a piece, but only with a piece. I mean really, theyre only a serious competitor in the database. IBM competes in the high end of the enterprise with WebSphere and DB2 a littlebut DB2 has so little traction. In the hosting market, we certainly compete with Linux and PHP. Thats why we really wanted to take a look at what weve done for shared hosting and with the Web Developer Express Edition, because I think weve done some amazing work that will help us build share against that competitor. But I would say youve got those guys and then youve got the old Unix crowd, such as Sun, HP, etc. Those are probably the four competitors. None of them have as complete a stack as we do. None of them have as integrated a stack as we do. Were openyou can plug our stuff in with other guys stuff. But at the same time, our whole is bigger than the sum of our parts. And none of the competition tries to go from student to enterprise, and from one-person, two-month projects on up to 30 people for a few years. So I dont think theres anybody whos trying to compete across the board. And we are in fact trying to be best of breed. We want to be the best platform for shared hosting, we want to be the best platform for the enterprise. Despite the fact weve got this breadth, we think we can have breadth and be best in class. And we know thats important to the developer crowd. Next Page: Competition in tools.