Microsoft Corp. on Tuesday said it is updating and repackaging its Web-based e-mail and Office services in an ongoing effort to keep Google Inc. from encroaching on its home turf.
The software industry is in the midst of a major shift from the desktop and server-based programs on which Microsoft built its business to ones that are accessed over the Internet. Companies are starting to embrace the idea of "cloud" computing _ trusting Google, Microsoft and others to manage their information and technology out of vast data centers that serve many other customers.
Google was faster to bring word processing, presentation editing and other office-work applications to the cloud. Microsoft closed the gap with Office 2010, which launched in May with free Web apps. Today, Microsoft says it has 40 million people paying to access its cloud-based services. Google says its own line of cloud software, Google Apps, has 30 million users; the company will only say that "millions" of people pay instead of using the free version.
"Office 365" wraps up Web-based versions of Word, Excel and other Office applications; the Exchange e-mail system and SharePoint online collaboration technology; and Microsoft's unified communications system, which includes instant messaging, Internet phone and video conferencing.
The new package is an upgrade to technology that was available in the past under other Microsoft brands, including the Business Productivity Online Suite (known colloquially as B-Pos) and the Live(at)edu package for schools.
For small businesses with 25 or fewer employees, the package will be sold on a subscription basis for $72 per person per year.
For the first time, Microsoft is also selling access to its standard desktop Office programs on a subscription basis, as an option for Office 365 for enterprises. Large companies can give employees access to different levels of software for $24 to $324 per person per year. The software is still in beta test phase, and will be widely available next year, Microsoft says.
Microsoft is betting its familiar programs and long history of providing technology and support to businesses will justify the premium over Google's $50 per person per year Apps product.
Google Apps "was really the primary competitive target for this," said Gartner Inc. analyst Jeffry Mann in an interview. Office 365 arrives as companies are becoming more comfortable with the idea of cloud computing.
"What it comes down to is, do you trust Microsoft (or Google) to run your crucial systems for you?" said Mann. "Every month, every quarter, there are more companies that are willing to do that."