The fundamental question Microsoft faces is whether the PC will continue to play a central role in tasks people now use it for, from storing music to watching videos and writing documents. In recent years, the spread of high-speed broadband Internet access and a host of new technologies have made it easier than in the past for people to use the Internet for such tasks. Consumers tap services like Flickr, an online photo site, and YouTube, the huge online video-sharing site, to store pictures and videos online -- not on their PCs. Increasingly, applications such as email and word-processing are offered as Internet services that don't require much, if any, software running on a PC. They also don't require the companies to release whole new versions of software as Microsoft does in its Windows and its Office line of programs. Google regularly updates its search and email services with little fanfare.

Microsoft executives are tight-lipped about how Windows will change, but it's likely a major redesign of Windows is in store. That means a delicate dance for the company as it tries to retool its software for the fast-changing Internet while trying to preserve one of the richest cash cows in business history.

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