Internet-connected appliances

Looking for growth in new markets where it is increasingly being bypassed, Microsoft plans late next year to begin offering a new "cloud" operating system that would manage the relationship between software inside the computer and on the Web, where data and services are becoming increasingly centralized.

The company needs a new kind of operating system for a new computing world populated not by a single style of desktop computer but instead by dozens of different kinds of Internet-connected appliances ranging from smartphones to mini-laptops called netbooks.