The paradigm shift will be to Software plus Services
Todd Bishop's Microsoft Blog on TechFlash has a post titled "Microsoft's new Tablet PC Prototype" that discusses Craig Mundie’s tour of U.S. universities and in particular a prototype Tablet PC application Craig showed that mixes online services and PC-based software.
Todd has posted a video of the prototype that he was shown a few weeks before by Jonathan Cluts, Microsoft's director of strategic prototyping.
As noted toward the end of the video, this is purely a prototype, with no immediate plans to turn it into a product, but like World Wide Telescope, it serves to demonstrate the power of the Software + Services vision.
Software-plus-Services is Microsoft's approach for the next generation of computing. It is a confluence of multiple industry phenomena including SaaS, SOA, and Web 2.0. This is more compelling than software OR service only approaches, bringing together the best of cloud-based services and the software that resides on a world of devices.
As the Economist report I linked to yesterday starts to explore, the shift to cloud computing has many associated policy implications. My assessment is that the software plus services model mitigates many of them. The point of convergence is applications like this prototype and the World Wide Telescope that marry the power of client computing and client storage with the power of cloud computing and cloud storage.