Steve Ballmer has made some statements recently regarding the future of desktop and workstation PCs, putting an emphasis on “software as a service”, with additional focus on services provided over the Internet. What he said comes as absolutely no surprise, and falls exactly in-line with what Microsoft and many other vendors have been slowly moving towards in the past few years. Many operating systems and software packages already employ these ideals, with the ability to download programs or program modules on-the-fly, for free or for a charge, to expand the functionality of a machine. Ballmer says Microsoft is moving in the same direction:

Asked about the future role of a traditional boxed-software provider such as Microsoft, he said Microsoft "absolutely believes in evolving to this kind of click-to-run internet-style of simplicity across all products". Microsoft needs products that can be produced every few months where necessary, products that come out every year and those that take a few years to be delivered, Ballmer said.
The article does note that Microsoft really hasn't kept up with other vendors that are pushing this, but in typical Redmond style they are looking to to slowly become a giant in it, rather than be a pioneer. He didn't comment about personal software rights or DRM, which is probably good since DRM is a bit of a sore spot for MS at the moment. It wasn't even a month ago that Microsoft talked about a web-based office. It does go to show that software-as-a-service is headed our way.