A general consensus is beginning to emerge in the wake of the leaked memos from Microsoft and the announcements of Windows and Office Live Web services.

Gartner researcher Tim Bittman recently said that Microsoft will end up cannibalizing Windows and Office in an attempt to attack Google on its own turf, the open internet. “It’s not so much about how you’re going to beat Google. It’s more about how you are going to beat the Google model. Microsoft is going to be forced to compete with Google, forced to compete with its own business model.”

Can high-volume, high-margin software compete against high-volume, low-margin advertising? It depends on the size and expectations of the business.

Google began small and used guerrilla tactics to pick off the enemy’s weak points. It still does. Its Desktop search in some ways filled the gap left by the dropping of WinFS from Windows Vista. Google is disruptive. It had to be to make its way in the market.

If Microsoft gets disruptive, who will it disrupt? The guys who hold 90 percent of the most lucrative market : Microsoft. There’s an incestuous, backfiring, autoimmune reaction going on here. A kind of turning-in, like someone arguing against himself in a debate. You can sniff it in the air, like cordite.

Google has one-eighth of Microsoft’s income with one-twentieth of the workforce. Its growth is in the 90s percent, compared to Microsoft’s 6 or 7.

Cringely make the point that advertising will never match Microsoft’s current revenues :

Gates and Ozzie HUGELY over-estimate the role of advertising. This is intentional because it distracts with enthusiasm and plays into current Internet hype. Advertising alone will not be able to support these services, especially if Microsoft benefits from them only tangentially as Ozzie suggests. Remember that for Gates and Ballmer to be happy, Microsoft will have to maintain $2.5 billion per month in revenue and $1.5 billion per month in profit. That’s FIVE TIMES the size of Google without Google’s ad expertise or ad infrastructure. It simply won’t happen.

And the end result? “Once the developers are committed and have made their Microsoft-centric technology investments, Microsoft won’t gain much further, so it will be time for those third parties to start to die. Microsoft will buy 3-4 top players and then introduce knock-off services to kill the rest. The company’s incessant need for revenue growth practically mandates this. It’s this maw against which Microsoft, itself, is powerless.”

Scott Johnson of Feedster believes Microsoft will have to buy up the best Open Source developers to slow down the server-side growth of OSS software. He thinks there’s still some mileage in the Redmond model of the desktop. A positive message could help there, he says.

Maybe Mini-Microsoft is right. Slim it down, break it up and go for innovation and quick turnaround. But didn’t IBM do that after posting the biggest loss in corporate history? Look at them now, contracting by 8 percent a year.

If Microsoft has to adopt the guerrilla tactics of its perceived rival, its returns will be negligible compared to current revenues. In the 1960s the British army faced a massive insurgency in Indonesia. Had they adopted their own guerrilla tactics against an enemy that knew the terrain, they would surely have perished. Instead they calculated that a 15 to 1 numerical superiority was the answer. They drafted in the forces and won.

Lesson for Microsoft : don’t copy the methods of your competitors, do what you do, but do it better.