Microsoft is set to introduce a new operating system that will help developers write Internet-based applications.
The company's CEO, Steve Ballmer, speaking in London said the product, which will be unveiled within a month, is being developed under the name of "Windows Cloud." However, Ballmer said that the operating would probably be introduced under a different name.
Cloud computing is a term often applied to programs that are presented in a web browser, but the actual computing is performed at a distant data centre.
Ballmer was short on details, saying more information would spoil the announcement. Windows Cloud is a separate project from Windows 7, the OS Microsoft is developing to succeed Windows Vista.
Companies such as Google and Salesforce.com have embraced the concept of delivering software over the Internet, as it can mean lower costs and less maintenance for those who use the applications.
Microsoft, which has built its fortunes on desktop-based software, has been anxious to show it also has plans for adapting its software for the Internet.
Ballmer was quick to point out that Microsoft doesn't envisage products such as the Office productivity suite to move entirely off desktop PCs and onto the Internet.
But Microsoft is working on a service that would let people do "light editing" of Office documents at places such as a public Internet kiosk, Ballmer said.
"That's all I can say on that," Ballmer said. "Otherwise, we have no drum-roll announcement in a month."
Microsoft is developing online components for many of its products such as its SharePoint collaboration software; the Exchange email server and its Dynamics Customer Relationship Management software, Ballmer said.
Microsoft calls its strategy "software plus services," where its core applications are augmented by web-based functionality.
Microsoft has been facing increasing pressure from Google, which offers a web-based productivity suite called Google Docs and Spreadsheets.
Ballmer was dismissive of Google, saying Docs and Spreadsheets has "relatively low usage" and that users want richer features in an office software package.
"We want software more powerful than software that runs in a browser," Ballmer said.