Dare Obasanjo believes that disconnected desktop software is dead (as do I) - which is likely a painful reality for Microsoft - they make a ton of cash from Office right now. Dare refers to a number of announcements about online application suites, ending with Microsoft's "Office Live" - which he doesn't seem to think much of:

As you can see one of these four announcements is not like the others. Since it isn’t fair to pick on the stupid, I’ll let you figure out which company is jumping on a dying paradigm while the rest of the industry has already moved towards the next generation.  The Web is no longer the future of computing, computing is now about the Web.

Forget the "rich user experience" offered by desktop UIs. People have moved on to the 80% solution that is the web UI, because the other advantages outweigh that loss of "richness".