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Microsoft takes aim at Google Apps with Office 365

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

By , Network World
October 19, 2010 02:58 PM ET

Network World - 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.

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