I read an article today talking about Google finally offering a version of their many office productivity tools as a paid service to businesses.
People have been speculating about this sort of stuff for a while now, and since most of us have experienced web applications ourselves we have no doubt this is the direct a lot of productivity tools will go.
Microsoft has also produced a similar product called Office Live.
I think all of these types of products are going to move to online subscription based models in the near future; and this could finally lead to the death of upgrade software and licensing.
One thing Microsoft can certainly do with is some healthy competition on the Office front. I know most people find that their software is over complicated and bulky.