Bill Gates' replacement Ray Ozzie on whose shoulders the company's future rests, the guy who has to dig Microsoft out of the Internet hole it finds itself it and at all costs salvage the client, started this week to try to redefine SaaS, software-as-a-service, as "software and a service," a combination of desktop software and web-based widgetry, the company's latest shot at the Internet.

"Even SaaS providers have found the need to expand offerings to include an offline edition," he said. "SaaS 1 meant the web; SaaS 2 has come to embrace the unique value of the client."

"It is thought provoking," he ventured, "to listen to the extreme viewpoint: no more software." But "I've been though five software transitions and the pendulum did swing, but the best solutions were integrated that would bring together the best of one world with the best of the other."

This all happened at a so-called MIX07 developers conference Microsoft put together in Las Vegas and comes down to a fight over developers and the web as a development platform, which in turn means slapping down Adobe, whose widgetry is used by such as YouTube.

In the run-up to Microsoft's beta release of Silverlight 1.0 and alpha release of Silverlight 1.1, the cross-browser plug-in that's supposed to be an RIA alternative to Adobe's Flash player - Adobe's way of adding multimedia content to web sites - Adobe played the first card and said it would open source its Flex web development framework - under the relatively restrictive do-not-distribute Mozilla License - when Flex is updated to the new Moxie version in the second half.

It's clearly a bid to appeal to open source developers.

Microsoft countered by integrating a subset of the ubiquitous .NET Framework, its way of writing desktop programs, into Silverlight 1.1, a web adaptation of Windows Presentation Foundation, the user-interface widgetry in Vista and Microsoft's way of writing video apps that run on the Internet, painlessly moving its developer base to the web. Silverlight 1.0 should come out this summer.

Microsoft also added Silverlight tools to Orcas, the next version of the Visual Studio IDE.

And there's now some widgetry called Silverlight Streaming by Windows Live that should stream RIAs to both Windows and the Mac OS and let developers use Microsoft servers to store and deliver their Internet apps, free for 4GB of data.

Microsoft opened up APIs to Windows Live services so the services can be integrated into Silverlight Streaming and wind up on Silverlight applications.

It also trotted out an Expression Studio 2.0 toolkit preview for building applications that combine web and desktop features including the pre-existing web site design tool Expression Web; graphics editor Expression Designer; and multimedia manager and editor Expression Media

Silverlight 1.0 includes Microsoft's AJAX library and a JavaScript engine, can execute C#, and play WMV, WMA and MP3 files. The follow-on 1.1 will add layout and editing, DRM capabilities, a dynamic language runtime for developing in so-called IronRuby and IronPython languages and database access.

Microsoft "open sourced" the IronPython and a cross-platform Dynamic Language Runtime (DLR) through its Permissive License which allows code to be viewed, modified and redistributed commercially or otherwise.

Microsoft says it might put the stuff on - smelling salts, please - Linux and mobile platforms. It will eventually work on the Mac Safari browsers.

Microsoft is claiming CBS and Netflix as Silverlight customers.

See www.microsoft.com/silverlight.