Microsoft building a fully Web-based Office?

Microsoft is leaping into hosted applications big time. InformationWeek reports that Microsoft plans to offer hosted implementations of SharePoint, CRM and ERP applications. But the best quote in that article was left till last. A "Microsoft insider" was asked which other products and services Microsoft would host and the reply was: "Everything. Hosted Office. Everything hosted."

Ahem, can anyone say Web 2.0 Office? Exactly a month ago I wrote what turned out to be a very popular post entitled The Web-based Office will have its day. My main focus in that post was all of the small start-ups that are currently building web-based office apps. I forgot to mention that of course there's nothing stopping Microsoft from building their own Web 2.0 Office! Perhaps that's their only option to head off Google, because Google Office has been rumored to be around the corner for 1-2 years now.

In any case, what Bill Gates calls "the server equals service thing" is undoubtedly a key strategy for Microsoft in the Web 2.0 era. It's another way of saying 'software-as-a-service', which is another way of saying 'Web as platform'. InformationWeek's article linked all of this to Microsoft's highest profile CTO Ray Ozzie:

"Next week in San Francisco, Gates and Ray Ozzie, one of Microsoft's CTOs, are slated to talk more about the company' software-as-a-service push. Ozzie, the former chairman of Groove Networks, has been charged with leading Microsoft’s charge in this area. This week at another San Francisco event, Ozzie said the company will rely on experience gleaned from its MSN online service."

Although the hosted services move will put Microsoft into more immediate competition with the likes of Salesforce.com and NetSuite, I see this as a natural segue for Microsoft into the Web 2.0 world. Plus it ups the ante significantly in their much-publicized competition with Google.

Microsoft has come to realise that most of the value in an always-on broadband world derives from 'the cloud' - aka the Web. So if Microsoft is going to stay competitive with the likes of Salesforce.com - and keep Google and their web-based Office at bay - then they need to start the transition to the Web platform NOW.

I have to admit though, even I didn't realise they would move so quickly to an "everything hosted" suite of products. If they do come out with a web-based Microsoft Office, within say a year, then I will be very impressed. Perhaps Google should hurry up and release their own web-based Office, before it's too late?