The rise of the Internet has had a profound effect on application development and user interfaces. In a similar fashion, emerging web services technologies have the potential to change the way applications are assembled and re‐used. Web services provide application designers new building blocks for assembling a product that meets users' needs – at the same time, web services come with their own set of design constraints. For web services to be successfully incorporated into a product, it is important that system designers understand how web services change application design. This paper begins by exploring the main components of web services and shows how web services affect system design. In addition, web services introduce three concepts – modularity, re‐application and interface decomposition – that can be applied to general system engineering design.