Live Mesh is an implementation of Microsoft’s Software+ Services strategy.
Software+Service mean that you can leverage the new world of cloud computing and compliment your application software that runs on PC or any device to provide a better solution, rich experience to your users.
There are various reasons for this to be the right approach then SaaS or software as a Service model.
A) The browser is still unable to provide rich user experiences, so consuming your services using browser has feature limitations, if you blend client software to provide the richness in experience and leverage internet to deliver those experiences and data then it is best of both worlds.
B) The offline story, S+S allows you to work offline with your data and then automatically synchronizes it on the cloud, which is the right solution for many road warriors and also for folks who work from home and not have the same kind of bandwidth and don’t/can’t be always connected.
C) Control of data, privacy if you move every piece of your data on the cloud then you lose control. With S+S you can decide what you want to move to the cloud and what you want locally.
D) The fluid nature of internet, no or minimal cost of switching, so for vendors making software to compliment their services makes the solution more sticky and provide the experiences, value add in ways that is not possible on cloud.
E) For Vendors it opens up new opportunities to monetize their solutions with different business models, Ad, transaction, subscription.