Microsoft launches Office in the cloud

The web-based versions aim to make collaborative working much easier

Microsoft is launching a cloud-based version of its Office software suite.

Called Office 365 the service puts the familiar e-mail, word processing, spreadsheet and collaboration programs on the web.

Microsoft said the programs will be accessible via desktops, laptops and tablets plus Microsoft, RIM, Apple and Android smartphones.

The launch is aimed squarely at Google and others who already offer web-based business software.

Cash cow

Office 365 is being formally launched on 28 June via events in New York and London. The service unshackles the well-known programs from a single PC and translates them into a web format.

Charges for the service are based on the size of the business that wants to use it Small businesses with fewer than 25 employees will pay £4 per user per month for secure access to e-mail, calendar, documents and contacts.

Larger organisations will pay from from £6 to £17.75 per user, per month and get a broader range of extras including advanced archiving, unlimited storage and Microsoft's Lync messaging and communications system.

Customers using Office 365 can host the applications they are using in Microsoft's data centres, use dedicated servers in those centres or put the programs on their own hardware in their own data centres.

Office 365 takes the place of Microsoft's current web-based offering for firms known as the Business Productivity Online Standard Suite. Office 365 stands separate from the web versions of Office which features cut down versions of the familiar programs.

The move to the cloud is seen as a gamble by Microsoft because much of the cash generated by Office comes from sales of software installed on desktop PCs. Switching to the web could dilute this cashflow which is responsible for about one-third of the company's revenue.

However, a web option is seen as essential in order to combat the growing threat from Google and others that are starting to poach Microsoft customers.

"Windows and Office are the two foundations of Microsoft's profitability and this is kind of messing with one of them," said Jeff Mann, a VP of research at analyst group Gartner. "It's definitely a very big bet."

Before the official launch of Office 365, Google put a post on its Enterprise Blog comparing its Apps service with Microsoft's offering.

Shan Sinha, Google Apps product manager, wrote that it was better to start with a new technology rather than add extras to an ageing one.

"Technology inevitably gets more complicated as it gets older," he wrote. "Upgrading platforms and adding features results in systems that are increasingly difficult to manage and complex to use."

In the blog post he runs through the differences between the two services, saying that Google Apps is about teams, the web and choice but by contrast Office 365 was for individuals, desktop PCs and other Microsoft-specific technology.

"You can't just take legacy, desktop software, move some of it to a data center and call it "cloud."," he said. "Apps was born for the web and we've been serving hundreds of millions of users for years."

Other online business software suites are offered by other companies including Zoho, VMware, IBM and Salesforce.com.