Microsoft said Monday it will let smaller businesses use some of its key software applications over the Internet later this year, a sign of the company's rapid move to the Internet-centric computing favored by competitors Google and Salesforce.com.

Last September, Microsoft opened its hosted software program, called Microsoft Online Services, to businesses worldwide with more than 5,000 users. Businesses pay a per-user subscription fee to access applications such as e-mail that are hosted on Microsoft's servers.

Those subscription-based services are typically cheaper for companies than installing applications on their own hardware. Other advantages include faster software updates and lower maintenance costs.

Microsoft, which built its fortune on so-called shrink-wrapped software, was criticized for moving too slowly in an area many analysts believe will develop into a significant portion of enterprise and small-business computing.

Company Chairman Bill Gates [cq] is expected to further detail the announcement on Monday in Seattle at a conference focusing on its SharePoint software. A limited beta trial of the services for small U.S. companies will start Monday.

Microsoft plans to make the services generally available by the end of the year. It did not disclose pricing.

The hosted applications will include Exchange Server 2007, used for e-mail, Office SharePoint Server 2007, a content management and collaboration tool, and Office Live Meeting, for audio and video conferencing over the Web.

Microsoft said a single Web interface can be used to managed those applications, performing tasks such configuring access for users, tracking support requests and managing licenses.

New subscription customers will also be able to blend their online software with on-premise software installed on their own servers.

Microsoft is trying not to alienate existing customers paying for what some call a pricey insurance plan, called Software Assurance. The plan, for on-premise software, lets customers obtain Microsoft product upgrades and other incentives for free. Microsoft is offering Online Services at a discount for those who pay for Software Assurance.

So far, Microsoft said companies using Online Services include Autodesk, Blockbuster and Coca-Cola Enterprises.