The earnings announcement from Microsoft last week almost sounded like something from another era: solid revenue and profit growth thanks to strong sales of the Windows operating systems and the venerable Office applications. Online, well, that's still losing a ton of money. Games and entertainment? Better, but still a blip next to PC business.

Indeed, the personal computer business as a whole is showing a lot of strength, with industry analysts citing strong markets in Asia and an upgrade cycle in the corporate market, aka "the enterprise." Cool new consumer technologies tend to grab the headlines, but it's corporate buyers that still power most computer hardware and software firms.

Those corporate buyers, in turn, can be pretty conservative, and that helps explain why Microsoft is still able to sell word processors and spreadsheets and operating systems for hundreds of dollars apiece even as free alternatives proliferate. Google, and plenty of others, offer free web-based applications, and there are all kinds of cheap PC software out there too. But it's a lot easier just to keep buying Office.

And free or super-cheap open-source software, as with so many things technology-related, can be a lot more expensive than it seems. Bills for support and custom development can eat up a lot of the apparent savings. Training people to use something new can also be very costly.

Still, I can't help but suspect that the continued power of the Windows-Office axis is a short-term phenomenon. For one thing, the Windows Vista operating system has many shortcomings and its widespread adoption is not yet assured. In our mixed-platform company, Vista's new set of file formats and inscrutable security features are more than a little frustrating.

Further, the recent history of the technology business shows that paradigm shifts often take a little time to grab, but when they do, change is swift and often ugly for the incumbent. In the late 1980s, it took just a few years for IBM to go from being the essential source of a broad range of (very expensive) computer hardware and software to being on the brink of oblivion. Digital Equipment Corp. never recovered once cheap PCs took over territory previously occupied by expensive minicomputers.

This is not to say that the Windows-Office franchise is likely to disappear overnight. On the contrary, it will be around for a long time, and the continued growth in overseas markets and the corporate upgrade cycle may even mean a few more years of pretty good growth. But there is little chance that it will be as good a business in the future as it has been in the past, and my guess is it won't be long before the many radically cheaper alternatives begin to erode Microsoft's core franchise.

Microsoft, of course, knows this better than anyone, which is why it's determined to become a major player in media. It has paid $240 million for a 1.6 per cent stake in Facebook, $264 million in quarterly operating losses on revenue of $671 million in the online division, $6 billion for the advertising firm eQuantive – and those are the investments of a company that knows its core business is shifting. Microsoft really has no good reason to think it can be successful in the media business – it has failed before, after all, and its DNA is all about computer software – but it also recognizes that it doesn't have much choice.

As I've said before in this space I think a healthy Microsoft, rather than being the monopolistic threat it once was, is a good counter-balance to the power of Google. And I give Steve Ballmer, the company’s chief executive, a lot of credit for steering the company in new directions and weaning it from the cult of Bill Gates. But pretty soon now he'll have to prove that Microsoft can be something much, much more than the Windows and Office company. And that will be no easy trick.

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Jonathan Weber is the founder and editor in chief of NewWest.Net, a regional news service focused on the Rocky Mountain West in the United States. He was previously the co-founder and editor in chief of the Industry Standard

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