Microsoft made a fairly big announcement today in San Francisco. Some will say this is Microsoft playing catchup or follow the leader, others will say this is Microsoft innovating, and still others will say this is simply Microsoft making make a smart business move. I think I fall into the latter camp. Here are the details:

Kicking off what he called the “live era” of software, Microsoft Chairman Bill Gates said on Tuesday that the company plans to launch new Internet-based complements to its core products.

Gates said Microsoft is working on two products, “Windows Live” and “Office Live,” that create opportunities for the company to sell online subscriptions and advertising. Both are targeted at smaller businesses and consumers.

Services like Windows Live and Office Live have been expected for a very long time, so I can’t say the announcement is earth shattering. It will have very far reaching effects though. Joe Wilcox has a couple of good posts where he explains what “Live” is, and what “Live” is not. Here’s my favorite “not”:

While Google might be a catalyst in Microsoft’s services strategy, the reasons for launching Live are much broader than the search rival. Microsoft is looking to accomplish a couple things: For MSN, the new services are a way to drive additional revenue–whether from advertising or paid services–off clearly identified market segments, small businesses for Office Live and active online consumers for Windows Live. For Windows and Office, Microsoft hopes to generate greater customer value and make new-version Office and Windows upgrades more appealing. MSN has done a tremendous job cranking out new products and services, well ahead of the long Office and Windows development cycles. The point: If Google didn’t exist, Microsoft probably still would have embarked on a services strategy.

I expect that “copying Google” or “defensive move against Google” will be the most commonly assumed reasons for the new Live services, but I agree with Joe. There’s a lot more to Live than Google, and let’s face it, Windows and Office services over the Internet were pretty much inevitable.

A few people have asked me what “Live” means. While I see Microsoft’s reasoning for tying into Office and Windows brands, I’m skeptical of Live’s appeal. Live certainly doesn’t grab me, and, yes, there is uncertainty about what it means. Is it supposed to mean the living Web? Maybe community or safety? I’ll let Microsoft answer that question.

Did “Windows” grab anyone when it was released? How about “Office”? (Though I suppose both of them described intuitively their respective functions.) I’ll admit that Microsoft has some absolutely terrible product names, but I think the simplicity of Windows Live and Office Live will work well for the company.

Not much word on the developer side of things yet, if there is such a side. As a platforms company, you would expect Microsoft to offer access to the new “Live” platform. Certainly Gadgets and some of the other Vista-era technologies will be important, but details are yet to emerge.

I’ll probably have more to say on “Microsoft Live” later – it’s a lot to digest, even if it was expected.