Microsoft takes aim at Google Apps with Office 365

Microsoft Office 365 keeps Office Pro on the desktop despite expansion of cloud services

Microsoft ups its cloud game, but stops short of going all-in.

Microsoft is trying to combat Google with new cloud computing packages incorporating all of its productivity software, but is stopping a bit short of going "all-in." 

Microsoft announced on Tuesday that it will package its cloud-based office services known as "Office 365" and offer a variety of subscription packages for small businesses and enterprises alike. But Microsoft is still offering only a limited Web-based version of Microsoft Office.

Google Apps vs. Microsoft Office

Office 365 "brings together Microsoft Office, SharePoint Online, Exchange Online and Lync Online in an always-up-to-date cloud service," Microsoft said. Office 365 will be available shortly in a limited beta program and widely available sometime in 2011.

Customers will be able to get all of their software through subscription-based pricing, but the full version of Office will still require a desktop installation.

Microsoft's only cloud-based version of Office is the Office Web Apps service. While free to consumers, for business use Office Web Apps has to be deployed on a SharePoint server and Microsoft recommends it only as an "online companion" to Microsoft Word, Excel, PowerPoint and OneNote. The cloud-based version of Office is just for "light editing" and sharing of documents but little more than that, according to Microsoft.

This kind of support lets Google argue that Google Apps is the superior option for customers with small IT departments, since Google offers all of its tools online without requiring installation of on-premise software.

But even with today's announcement, Microsoft did not put everything into the cloud. The business version of Office, Microsoft Office Professional Plus, will remain a desktop-only offering, although it will be integrated with Microsoft's cloud services.

"Office 365 for enterprises … includes the option to get Microsoft Office Professional Plus desktop software on a pay-as-you-go basis, for the first time ever," Microsoft said. "For $24 … per user, per month, organizations can get Office Professional Plus along with e-mail, voicemail, enterprise social networking, instant messaging, Web portals, extranets, voice conferencing and video conferencing, web conferencing, 24x7 phone support, on-premises licenses, and more."

Microsoft therefore seems to be sticking to its strategy of selling a combination of desktop software and cloud services, rather than offering everything online, despite CEO Steve Ballmer's pronouncements that Microsoft is "all-in" for the cloud.

In response to a Network World inquiry, Microsoft confirmed that "Office Web Apps are still the only Web-based productivity version of Office software."

Microsoft didn't mention Google by name in an announcement telecast, but did acknowledge the existence of competitors.

"We think we can differentiate from our competitors, particularly competitors from the consumer space, by making sure our data centers are incredibly secure and reliable," said Chris Capossela, senior vice president of Microsoft's Office division.

Although Office 365 seems to be mainly a repackaging of previously available cloud services, the way the services are packaged and priced may lure in some customers. Office 365 will leverage the 2010 versions of Exchange and SharePoint, whereas today most Microsoft cloud customers have to use the 2007 version. Office 365 "brings more complete versions of Exchange, SharePoint and Lync and a new platform with single sign in, federated identity, scripting and more," Microsoft said.

For home workers and small businesses of up to 25 to 50 users, Microsoft will charge $6 per user per month for Office Web Apps, Exchange Online (with antivirus), SharePoint Online, Lync Online, the option to create an external Web site, and community support. The small business version will give smartphone owners mobile access to e-mail, documents, contacts and calendar.

The enterprise versions, meanwhile, will cost anywhere from $2 to $24 per user per month and include single sign-on capabilities through Active Directory, antivirus software, IM and presence, video conferencing and audioconferencing, intranets and extranets for team sites, and access to Office Web Apps and the desktop-based Office Professional Plus.

Existing customers of BPOS (Business Productivity Online Suite), which includes Exchange Online and SharePoint Online, will be able to receive some of the advantages of Office 365 for the same price they pay today, about $10 per user per month.

Access to Office Professional Plus desktop software ups the price to $24. The smallest price point, $2 per user per month, includes only basic e- mail.

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