Microsoft will soon detail ways that partner companies will be able to deliver their services based on Microsoft's hosted services, the software company said on Tuesday.

When Microsoft earlier this year announced that it will host its Exchange and SharePoint software for businesses of any size, some third-party software providers wondered about their futures. Companies that offer software that runs on SharePoint, for example, were worried that they wouldn't be able to offer products to customers of Microsoft's hosted service.

But on Tuesday, Microsoft said that it plans to host third-party applications for partner companies, so that customers of its hosted services can use those applications.

"We'll allow our partners to build applications that we'll host for them and take that to small and medium-sized business," said Kevin Turner, chief operating officer for Microsoft, speaking to a group of reporters at the company's headquarters in Redmond.

For example, if a partner company develops a human resources application for SMBs and wants to plug that into Office Live Workspace and tailor it for specific vertical industries, the partner will be able to leverage Workspace for that, he said. Workspace is a beta offering from Microsoft that lets users store and share documents online.

Microsoft understands that its partners are concerned about how the company's shift toward hosted services may affect them. "Any time there's a major disruption in the business model, partners who have built a business around a business model get nervous," Turner said.

Last year at its Worldwide Partner Conference, Microsoft was aware that its partners were beginning to be concerned about their futures, but the software company didn't yet know exactly how the business model would work out, he said. This year at the conference in July, however, Microsoft expects to detail business models that its partners can take advantage of.

As the industry in general moves away from traditional packaged software to more hosted services, Microsoft has had to shift its strategy as well. But the company's dependency on selling packaged software and its software-centric install base has caused it to move more cautiously into the SaaS (software-as-a-service) market than competitors that started their businesses on the Web, such as Salesforce.com and Google.

The IDG News Service is a Network World affiliate.