Microsoft chairman Bill Gates yesterday unveiled the firm's Live Software strategy for online applications.

The software maker is developing a host of applications under the Windows Live and Office Live brands that allow users to take their settings and data with them as they move between different machines and devices.

"The kind of software that we are building here will be very dramatic," said Gates at the launch event in San Francisco.

"This is a big change for everybody, not just users but developers, business partners and every part of the ecosystem. This is the Live era."

The applications will not replace existing Microsoft products, but will offer additional services. Users of Windows and Office will keep the option to use the software as a standalone, locally installed product.

The hosted technology is targeted at consumers and small businesses with up to 10 employees. It will be made available free of charge with advertisements, and Microsoft plans to offer a premium version for a fee.

Windows Live is a collection of applications for end users including email, blogging and instant messaging. Existing MSN products will be added to this group, including MSN Messenger and Hotmail. These two will be rebranded Windows Live Messenger (video demonstration) and Windows Live Mail (video demonstration).  

The product also includes a new homepage on the Windows Live website where users can add information from a range of online and offline sources (video demonstration). 

Possible items on the page include saved searches on MSN Search, RSS feeds, a list of recently viewed documents and system information, along with corporate data including a Sharepoint server.

Microsoft also expects to release a series of gadgets (video demonstration) for the Live.com page, which are essentially hosted applications. 

One example of a gadget is the new Windows Live Safety Centre (video demonstration) which provides several security features. It offers a limited version of the capabilities available in the forthcoming OneCare consumer security product. 

Another newly developed feature, Windows Live Folders (video demonstration), allows users to share folders on their computers. Any files that are put in these folders will automatically be shared with the other users. 

Applications will also get more closely integrated. The service will include a Live Contacts (live demonstration) that automatically synchronises contact information between subscribers.

When a user changes a phone number, for example, other contacts will a utomatically receive updates of the change without any user interaction.