Microsoft takes Office to the cloud

Office 365 upgrades and rebrands the BPOS suite of hosted services, adding Office apps to the cloud package and extending it to small businesses
Written by Ben Woods, Contributor on

Microsoft has introduced Office 365, which makes web-based versions of its productivity applications available in its cloud services for the first time.

The package, announced on Tuesday, allows customers to combine Office 2010 Pro Plus, Exchange Online, SharePoint Online, Office Web Apps and the recently renamed Lync video-conferencing software for delivery in the cloud. These are collected into a single package that will be sold on a per-month, per-employee basis when it arrives next year.

Office 365, which is available now in limited beta, is an upgrade and rebranding of the Business Productivity Online Suite (BPOS). It replaces the cloud-enabled tools in BPOS, Office Live Small Business and Live@edu.

Microsoft said that Office 365 will enable easier collaboration, broader access to its software and has the added benefit of familiarity.

Kurt DelBene image

Kurt DelBene has taken charge of the Microsoft Office Division. Photo credit: Microsoft

"There is no learning curve. End-users aren't really going to see much of a difference. They're just using the same tools they're used to today with Office — it'll be the latest version of those tools — but they'll be connecting up to our datacentre using Exchange, SharePoint and Lync on the back end. But the end-user experience on the phone and browser really is unchanged," said Chris Capossela, senior vice president in Microsoft's Office Division, during the announcement event in San Francisco.

The cloud is set to change the way people interact with applications, in the same way the arrival of graphical user interfaces did a generation ago, according to newly appointed Office president Kurt DelBene. He said Microsoft is dedicating tens of thousands of engineers to Office 365 and is investing deeply in cloud services.

"The cloud is one of the most transformative developments I've witnessed in my career," DelBene said in a statement. "As a result, we optimised our engineering for cloud computing, and now, every engineer in the Microsoft Office Division is thinking about services. Moving forward, we will continue to deliver customers the best productivity experience in the cloud, on-premises or through any combination in between."

In November 2008, Microsoft started offering hosted Exchange and SharePoint services under the banner of Microsoft Online. It followed that in March 2009 with the launch of the BPOS, which added Office Live Meetings IM software. Later, it extended the package with Office Communications Online, which is now known as Lync Online.

Microsoft will be offering two variants of Office 365 — one for small and medium-size businesses (SMBs), and another for larger organisations. Pricing for the UK has not been announced, although the company has released US subscription details.

Subscriptions for the SMB version, for companies of between one and 25 users, are set at $6 (£3.8) per employee, per month. This package includes Office Web Apps, Exchange Online, SharePoint Online, Lync Online and a basic external website. At this level, only the basic, trimmed-down Office Web Apps is offered, rather than the full Office desktop equivalent.

Pricing for the enterprise is not so straightforward. For subscriptions starting at $2 per employee, per month, companies can get basic email access. A plan comparable to the small-business option will cost larger organisations $16, and for the full Office experience, prices will start from $24 per employee, per month.

"While Microsoft naturally emphasises the productivity benefits integration with the rest of the products will bring, many corporate buyers will be hunched over their calculators figuring out how the new possibilities will affect what they pay for Microsoft Office products. With prices ranging from $2 to $27 per user per month, it won't be simple to do the maths," Jeffrey Mann, vice president for collaboration and social software at Gartner, wrote in a blog post.

Upon its launch in 2011, Office 365 will come with support for Windows only. However, Microsoft told ZDNet UK's sister site CNET News that it will offer a Mac version in the future. In addition, the company said in its announcement that later next year, it will fold Microsoft Dynamic CRM options into Office 365 and will also launch Office 365 for education.

The Office 365 beta is open to just a few thousand participants, and businesses can sign up by visiting the Office 365 beta product page.

Microsoft's move puts it in more direct competition with Google, which provides free Google Docs and Gmail as well as subscription-based web apps for businesses. By comparison, Google Apps Premier Edition, which includes access to Google Docs, Calendar, Mail, Sites and IM, costs $50 per user, per year. In September, the company announced that it had signed up more than 3 million businesses to its Apps service.

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