Microsoft Follows Google Into Cloud Computing

Microsoft (Nasdaq: MSFT) took the wraps off its latest entrant in the online business applications market Monday, announcing the creation and upcoming beta of its Microsoft Office Live Workspace. The software maker also revealed details about its "software services strategy and road map" for businesses.

"This new era of connected computing is about empowering people and businesses to balance the power of the Internet with rich interactivity and high performance of client and server software," said Jeff Raikes, president of Microsoft Business Division.

"With today's announcements, we are taking a significant step forward by combining our deep client and server software experience with our strong commitment to delivering flexible services offerings for our wide variety of customers and their unique needs," he continued.

Live and Online

The Redmond, Wash.-based company's two new groups of services bring office users on all levels Web-based applications that combine "the best of software and Internet services" for a "new generation of rich, seamless experiences that are personalized, integrated and available online anywhere," it said.

Live, offered primarily for individuals, business users and virtual work groups, and Online, targeted at enterprises with a higher level of IT needs for which power and flexibility play a significant role, will roll out in the coming months, Microsoft said. According to Raikes, the Online component will allow businesses to choose the software and capabilities that best suit their business needs -- be it a Microsoft hosted solution on premise or hosted by a Microsoft partner.

"We are laying out a roadmap for new Microsoft Business Division services and investments designed to increase computing options and break down barriers for everyone from individuals to large corporations," Raikes stated. "The new offerings and programs ... represent the next phase of the division's strategy for online services."

Name Game

Microsoft Office Live Workspace straddles the Live and Online border, offering benefits to anyone using Microsoft office to create documents. The site, not to be confused with its Web page and online advertising offering Office Live, which the company has renamed Office Live Small Business, will allow Office users to store, share and comment on -- but not create or edit -- Word documents.

The free site will work in tandem with computer-bound Office applications, providing users with around 250 megabytes of online storage for Word, Excel and PowerPoint files, and also connect to Outlook. Colleagues and others receive an e-mailed invite to check out the documents and provide feedback through their Web browser.

Compatible with Office 2003 and Office 2007, the site is intended to provide collaborative workers a home "in the clouds" that enables document authors to share their work with others without them having to go to the trouble of e-mailing documents to everyone involved. The site is currently accepting participants for its beta run.

Other online services for businesses with 5,000 or more users will include Microsoft Exchange Online, Microsoft Office SharePoint Online and Microsoft Office Communications Online. The company said it will also continue customer and partner support for its Microsoft Dynamics Live CRM site.

In addition, Microsoft announced the creation of Microsoft Exchange Labs, a new research and development program for testing next-generation messaging and unified communication capabilities in high-scale environments. It also unveiled Microsoft BizTalk Services, a building block service that enables developers to rapidly and cost effectively build composite applications and helps enable greater cost efficiencies and thereby open up new business opportunities for enterprises of all sizes.

Gathering Clouds

Microsoft's announcement puts it squarely in the middle of a growing market, where Google (Nasdaq: GOOG) and a few startups like Ajax13 and Zoho have already put out their respective shingles. These challengers' products differ from Microsoft's offerings in that they do allow online document creation and editing.

"At this point, I don't think they need to be out in front because the market is not quite ready yet anyway," Michael Silver, a Gartner (NYSE: IT) analyst, told TechNewsWorld. "The trick will be figuring out what the right time is -- too early and they could cannibalize Office; too late and they could lose the market. If this is enough to catch up in collaboration, they don't need full Web-based content creation and editing yet."

Microsoft's Office, however, is the predominant office productivity suite on the market, Rob Koplowitz, a Forrester Research analyst, told TechNewsWorld. The importance for Microsoft to do well cannot be underestimated, he said, adding that users are becoming aware of the benefits of accessing productivity in the cloud.

"Microsoft is very good software, and it's deeply entrenched," he pointed out. "That being said, there are challenges with moving specific areas of functionality into the cloud. It's not easy, but it's good that Microsoft has recognized the need to do it.

"They like the fact that accessing a single source of the truth solves a lot of issues with editing and versioning, and they want that functionality from Office," he continued. "Microsoft is doing the right things to address that functionality, but it's non-trivial."

Microsoft's strategy for its Software Plus Services is a powerful vision, Koplowitz noted. "The challenges will come in building an online offering that is secure and profitable. It's not simple to do. Microsoft will also need to address how this ultimately affects their licensing model."