Microsoft to Release Web-Based Office as It Fights Off Google

Microsoft Corp chief executive officer Steve Ballmer. Photographer: Pankaj Nangia/Bloomberg

Microsoft Corp. (MSFT) is updating its
online corporate software offerings to include a full Internet-
based version of Office 2010 for the first time, an effort to
stave off competition from Google Inc. (GOOG) for business accounts.

The Office 365 suite of programs will be introduced today
at an event in New York with Chief Executive Officer Steve Ballmer. The software will cost small businesses $6 a user each
month for a package with programs like Office Web Apps and
Exchange e-mail software, Microsoft said. For an additional $12
a month, companies can add a full version of Office, including
Word and Excel programs.

Microsoft, based in Redmond, Washington, is trying to keep
Google’s office-productivity software, called Apps for Business,
from making further inroads with corporate and government
clients. The two companies are fighting for customers who want
more applications hosted in the so-called cloud — on a network
rather than a hard drive. The full online version of Office
follows last year’s release of the more basic Office Web Apps.

“Financially, it will be a while before Office in the
cloud becomes meaningful, but it provides another delivery
mechanism for some of Microsoft’s mainstream products and brings
them on par with Google Apps,” said Sid Parakh, an analyst at
McAdams Wright Ragen in Seattle, who recommends buying Microsoft

Per-User, Per-Month

This update represents the first time Microsoft will sell a
full version of Office through an Internet-based cloud service,
and also marks the first time companies can license the programs
on a per-user, per-month basis, said Wes Miller, an analyst at
Directions on Microsoft in Kirkland, Washington.

For larger businesses, prices start at $2 for basic e-mail,
and companies can get a full copy of Office and other programs
like social networking and videoconferencing for $24 a month.
The software services are an update to an earlier product called
Business Productivity Online Suite, or BPOS.

Microsoft released Office 2010 a year ago, and said earlier
this month that it’s being adopted by business customers five
times faster than the previous version. Sales in the business
division, which is mainly revenue from Office, rose to $5.27
billion last quarter, exceeding the $4.9 billion average of
analysts’ estimates compiled by Bloomberg. The unit is
Microsoft’s biggest in terms of revenue.

Office Web Apps

Microsoft also offers a consumer version of Office Web Apps,
which are scaled-down versions of the Office applications. The
company said earlier this month that it has almost 50 million
users for those programs.

Google counts 3 million corporations and other
organizations as customers of its Apps business software,
including McClatchy Co., the National Oceanic and Atmospheric
and the states of Wyoming and Wisconsin, who
signed on with Google in the past month, according to spokesman
Andrew Kovacs. Google charges companies $50 a user each year,
and offers a free version for consumers.

Google Apps has 30 million active users overall, and
doesn’t break out how many of those are paying customers.

To contact the reporter on this story:
Dina Bass in Seattle at

To contact the editor responsible for this story:
Tom Giles at

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