Microsoft on Tuesday took the lid off its highly anticipated line of online services, called Windows Live and Office Live. The company has been quick to say that the new products are not meant to replace traditional desktop software, but instead are intended to enhance the Windows experience.

Using a phrase from rival Apple, the company says the goal of the Live initiative is to bring together all Microsoft technologies in a way that "just works," according to company CTO Ray Ozzie.

The Windows and Office Live services would be advertiser-supported; however, higher tiers of service would carry various subscription rates. They would also be offered separately from the Windows and Office programs, the company said, ostensibly trying to allay bundling concerns.

"This advertising model has emerged as a very important thing," Gates told attendees of a press event in San Francisco. "The live phenomenon is not just about Microsoft. It's partners, it's competitors; the whole space is being transformed."

Windows Live is currently in beta, and users can register to test the various features from a new central Web site located at Live.com. Live.com has its roots in MSN's Start.com portal, while adding support for Web-based versions of Microsoft Gadgets that will work with the Windows Sidebar in Vista.

Unlike Start.com, however, Live.com does not currently work with any browser other than Internet Explorer.

In the grand scheme of things, Windows Live is primarily a simple rebranding of current MSN.com services. Windows Live Mail, previously code-named "Kahuna" will serve as the next-generation Hotmail, while Windows Live Messenger is the name for MSN Messenger 8 - due out in beta later this year.

MSN Search has even been rebranded as Windows Live Search, although MSN.com will remain in place for the time being while offering access to Windows Live services. The MSN brand will also continue to exist according to David Cole, senior vice president at MSN, but for pre-programmed content rather than personal services that would fall under the Windows Live brand.

Other Microsoft applications and offerings taking on the Windows Live brand include OneCare Live, a Safety Center that will assist in scanning and removing viruses, and a feature that would allow users to access their Internet and MSN Explorer favorites from any computer.

Office Live, meanwhile, is essentially a re-branding of Microsoft's Small Business Solutions - with a free twist. It will help companies establish online presences through a suite of services that will give users a Web site with 30MB of space and a domain name at no cost, as long as they agree to host Microsoft advertising on their pages.

"A key objective of Office Live is to provide small businesses with the power to easily and inexpensively manage their business in a way that large enterprises already enjoy today," Rajesh Jha, general manager of Information Worker Services at Microsoft said.

The company would also make available ad-free versions of Office Live that would add more features. Some of the planned additions include project management applications, customer, time and billing management, and collaboration features among others.

The Office Live services will be built atop Windows SharePoint, the company said.

Microsoft plans to make the service available early next year through an invitation-only beta. Interested businesses can register at the Office Live Web site.

Michael Gartenberg, vice president and research director at JupiterResearch, says the online Live offerings announced Tuesday are not part of a reaction to moves by rival Google, noting that Microsoft has been planning these services for a long time.

"Let's also make one thing clear, these services aren't about replacing Windows or Office nor is this a retreat from the traditional Office applications," Gartenberg said. "Microsoft knows that the rich applications and OS model still have a lot of life left in them...These are not replacements for Office or Windows but extensions of them.