Microsoft Corp is making its biggest move into the mobile, Internet--accessible world of cloud computing as it takes the wraps off a revamped online version of its hugely profitable Office software suite.
The world’s largest software company is heaving its two-decade old set of applications — including Outlook e-mail, Excel spreadsheets and SharePoint collaboration tools — into an online format so that customers can use them on a variety of devices from wherever they can get an Internet connection.
It wants to push back against Google Inc, which has stolen a small but worrying percentage of its corporate customers with cheaper, Web-only alternatives, removing the need for companies to spend time on installing software or managing servers.
Microsoft chief executive Steve Ballmer was set to present an overhauled and updated set of offerings — collectively called Office 365 — at an event in New York City yesterday morning, underlining the company’s newfound online focus.
The market for Web-based software services is heating up and every company, government department and local authority is getting pitches from Microsoft and Google whenever they re-evaluate their office software.
It’s a new challenge for Microsoft, which built itself up on expensive versions of software installed on individual computers. That business model turned the Office unit into Microsoft’s most profitable, earning more than US$3 billion last quarter.
Microsoft’s plan is to make up for smaller profit margins from Web-based applications — because of the cost of handling data and keeping up servers — by grabbing a larger slice of companies’ overall technology spending.
In October last year, when it rolled out a test version of the new service, Microsoft said it planned to charge from US$2 per user a month for basic e-mail services to US$27 per user a month for advanced offerings. Google charges a flat fee of US$50 per user a year for its Web-based Google Apps product, which offers e-mail, calendars, word processing and more online.
Microsoft, like Google, will host users’ data remotely and maintain all the servers in vast data centers. Unlike Google, it will also allow companies to put their data on dedicated servers if they choose or keep the data on their own premises.
The full launch of Office 365 will spice up the lively competition with Google for new users.
Earlier this month, Google snagged InterContinental Hotels Group as a major customer, moving 25,000 of its employees onto Google e-mail from Outlook.
Google, which has had the most success in the small and medium-sized business range, says there are now 40 million users of online Google Apps suite. Microsoft does not publish equivalent numbers, but research firm comScore has estimated 750 million people worldwide use Office in some form.
However, Internet-centric Google — whose success is based on its dominance in Web search — is confident it has the upper hand in the cloud.
“Compared to what they [Microsoft] have in the market today, they have nowhere to go but up,” said Dave Girouard, head of Google’s worldwide enterprise business. “We feel we’re years ahead of them in terms of building a viable cloud solution that just works.”
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