updated 4/27/2006 7:18:33 PM ET 2006-04-27T23:18:33

Software prices could fall as companies develop subscription sales and other alternative ways of marketing applications over smarter Web browsers, Microsoft Chief Executive Steve Ballmer said Thursday.

"With less piracy, with more proper use, it certainly creates an opportunity for us and for other software companies to take a look at also reducing the cost, not just improving the benefits and the value of the software," Ballmer said.

The Microsoft Corp. boss was addressing an industry conference in Paris about an emerging new generation of highly interactive Internet sites — collectively dubbed "Web 2.0" — that offer desktop-like functionality within the browser. (MSNBC.com is a Microsoft - NBC joint venture.)

As broadband access becomes widespread and connection speeds increase, software makers will increasingly be able to offer complex solutions through the latest Web browsers.

Instead of supplying entire software applications on CD or by download to a PC, software makers could provide the same packages — or critical parts of them — as an online service accessible only by subscription. Such a "tight subscription relationship" would cut down on piracy, Ballmer said.

Piracy accounts for about 35 percent of all new PC software installations globally, an IDC study estimated last year — costing the industry an average of US$40 billion annually.

Google Inc.'s Gmail, Microsoft Live and Yahoo Inc. services offer early examples of Web 2.0-style applications.

Many draw upon Ajax, a set of Web technologies developed by Microsoft in the late 1990s but which now pose a threat as well as an opportunity to the U.S. software company.

Alternative browsers such as Firefox have recently made some inroads into the dominance of Microsoft's Internet Explorer, and analysts say online business applications made possible by Ajax could also challenge the company's flagship Office suite.

Microsoft is responding with a new browser, Internet Explorer 7, that incorporates some of the features made popular by Firefox, while also developing XAML, a slicker successor to Ajax _ compatible only with its own Windows operating systems.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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