Down Time

Microsoft Corp launched a fully online version of its popular Office suite of applications on Tuesday as it looks to extend its customer base and beat back rival Google Inc.

The new service, called Office 365, is available as a limited test from Tuesday, and will be on sale on a subscription basis worldwide next year.

Combining some of Microsoft's existing cloud-based services, it will be available through most browsers and on mobile devices.

That means customers can get access to Office programs like Outlook e-mail and SharePoint websites without installing software, from virtually anywhere.

The move strikes a blow against rival Google, which has had some success with its Google Apps service, which provides a low-cost, Web-based alternative to Microsoft's traditional Office software.

Shares of Microsoft were down 2.7 percent at $25.12 in morning trading, while Google fell 1.1 percent to $610.95.

Microsoft is doubling down on its commitment to the cloud with the launch of Office 365, a service that combines Microsoft Office, SharePoint Online, Exchange Online and Lync Online with the cloud.

Announced at a press event in San Francisco by Kurt DelBane, president of Microsoft's office division, Office 365 is a subscription service that integrates cloud-based syncing, collaboration, and accessibility to businesses and organizations worldwide. So long as a device supports ActiveSync, customers can access their e-mail, calendars, team websites and office web apps from anywhere. The inclusion of Lync also means that Office 365 has videoconferencing capabilities.

There are two editions of Office 365. Office 365 for Small Businesses is designed for organizations of one to 25 people. It's a pre-built package that includes Office Web Apps, Lync, e-mail sync, and more. It doesn't require IT support on the user's end and will cost $6 per user per month.

The second version is Office 365 for Enterprises. Unlike the small business version, the enterprise edition can be customized based on an organization's needs. It can be customized so different teams have different access levels to Office 365's features. The enterprise edition comes with everything in the small business version, plus single sign-in, Office Pro Plus (via subscription), internal social networking tools, voicemail in the inbox, and more. It costs anywhere between $2 to $27 per user per month, depending on which features the company chooses to utilize.

The beta will be available to a few thousand organizations starting today; its full launch will occur sometime next year in 40 countries. Sometime in late 2011, Office 365 will add Microsoft Dynamics CRM to its suite of products.

Microsoft is extraordinarily bullish on the cloud. DelBane said that the company believes the cloud is as radical of an innovation as the graphical user interface. Office 365 just makes sense though; the rising demand for enterprise-level cloud apps like Dropbox and Box.net is due to its ability to help teams collaborate and coordinate their efforts.

Microsoft has sent out to select beta testers the first iteration of its service pack for Office 2010. The service pack weighs in at 294 MB and is currently making its way into the inbox of a selected group of beta testers.

Office 2010 is Microsoft’s latest version of its popular productivity suite and is used widely across corporate America. A general rule in the IT world is to not install any products from Microsoft until SP1 has been released; this is typically done to ensure stability and security for the end user.

Our tipster has indicated that there are no noticeable changes after first use. This indicates that it may be a large patch to the platform that will further enhance the security and the stability of the application.

Microsoft Office is a big ticket item for Microsoft and its imperative to their financial success that the platform be adopted widely to meet its sales and financial targets. With SP1 just around the corner, Microsoft will soon be able to expect corporate America to begin its adoption of Microsoft’s latest Office offering.