Sources say that Microsoft may be on the verge of introducing a new pricing model for Office, called "union," which does not differentiate between cloud and on-premises installations. (It's already told some of its partners.) With union, customers would pay the same price for Exchange and Sharepoint subscriptions whether services are hosted in Microsoft's cloud or installed on premises.

I'm unclear about whether union would involve one of Microsoft's existing subscription-based hosted services, such as Business Productivity Online Suite and its "deskless worker" option, or if Microsoft will allow customers to develop and run Office applications on Azure and pay the same amount as on-premises. Windows Azure is open for business today.

Further, I am told that Microsoft has classified two types of business users: enterprise and light users. Enterprise users follow the client/server model, but light users might opt to run Exchange and SharePoint in the cloud. However, many of Microsoft's enterprise customers would follow a hybrid model, according to Tim O'Brien, director of the platform strategy group at Microsoft.

When I had breakfast with O'Brien last Monday (Microsoft paid), he acknowledged that some workflows (or parts of a workflow) should not be hosted in the cloud. That is true, and Microsoft has long been consistent about that.

Microsoft realizes that many of its customers' cloud strategies will follow a hybrid model, O'Brien said. It learned that lesson partly from experience with its hosted servics business. Microsoft intially believed that customers, including McDonalds and Kelley Blue Book, would consolidate Exchange and SharePoint online. Instead, they partitioned what ran on and off premises, O'Brien said.

Union would make sense for large enterprise customers like McDonalds, but it would also work for smaller customers that just need more capacity. My biggest question is how aggressively Microsoft intends to push subscription pricing, and whether Office is going to be available under a subscrption.