Today, in his final visit to England as chairman of Microsoft, Gates addressed an audience of decision-makers on the subject of hosted software, and CRM in particular. Immediately after Gates’ speech, the company “officially” launched Microsoft Dynamics CRM 4.0, which was actually announced on January 2.

During his presentation, Gates argued that “hosted software will be a big trend for the future.” And while Microsoft has been keen to position itself as being a provider of hosted software, it has traditionally been limited in making any bold moves for fear of damaging its existing software business. SaaS and commercial open source vendors like ourselves have forced the tech software giant to adapt.

That said, I still can’t help but feel that Microsoft is lagging. The company has come a long way since its inception, and light years in terms of its CRM offerings, but claiming that “hosted software will be a big trend for the future” in January of 2008 is aged to say the least. Competitors have already moved beyond what many industry pundits call the first evolution of SaaS and into the realm of multi-instance architectures where disparate software and hardware systems are sectioned for particular clients. With the release of CRM 4.0, Microsoft has taken another big step forward, but another step back with its proprietary-based and aged architecture. It will be interesting to see in what direction the company’s new leadership will take this proverbial 800-pound gorilla.

With his last trip to England yesterday, and with retirement quickly approaching, its almost time for Big Bill to turn over the crown.