Office Goes Live and Online

In its first major services platform announcement, Microsoft revamped Office Live and rebranded Office Online as a hosted service; the latter announcement is more an extension of a services strategy already announced for Dynamics CRM.

Microsoft's announcements come less than two weeks after Google made available online presentation software and the same day Adobe acquired Virtual Ubiquity and its Buzzword online word processor.

Adobe, Google and Microsoft all have the same goal: Provide meaningful information access—and even some collaboration—anytime, anywhere and on anything. The device shouldn't matter, nor the location. Adobe and Microsoft are extending their software out to the Internet, while Google pushes from the Internet back to the PC or device.

The increasing number of mobile workers is a major reason for this. According to IDC, the number of U.S. mobile workers topped 100 million two years ago, and half of European workers are expected to be mobile this year. Increased mobility, and use of devices like smartphones on the go, creates need for access beyond the confines of the office PC tethered to a local server.

Office Is Available Anytime, Anywhere
Anytime, anywhere and on-anything access presents a competitive threat and customer opportunity for Microsoft. The company's approach: To offer its own hosted services, starting with those supporting Office. As I explained in March, Microsoft's services platform strategy is first and foremost about extending its existing products to the Web, or what the company calls software plus services.

While Microsoft's strategy achieves some of the same Web platform anytime, anywhere and on-anything goals, Office Live and Office Online are not really Web 2.0 products. Microsoft has taken a very pragmatic competitive and customer approach.

Competitively, Microsoft wants to pull computational and informational relevance back to desktop software. Microsoft views the Web as an excellent adjunct to desktop software, with emphasis on companion. The goal of company's like Google is replacement of desktop products like Office.

For customers, Microsoft rightly recognizes that the increase in mobile workers creates need for more informational access from anywhere. Related: The need for groups of people to collaborate from different locales.

Additionally, Microsoft wants more lucrative subscription payment deals and to encourage more rapid deployment of new Microsoft software. Hosted services can get Microsoft a two-for, as in subscription revenues and new software versions made quickly available to customers without all the versioning and management hassles. This afternoon, I spoke with Jacob Jaffe, Microsoft's director of Office. He described the centralized deployment of new software as "one of the key advantages" of Office online.

Microsoft is shooting high and low with its services, for which individuals and small businesses get for free or low cost and for which enterprises pay. The services are divided into Live and Online—both dismal names from a marketing perspective, a topic I'm saving for a separate post. Live is for individuals and Online for enterprises.

Office Live isn't a new service, but Microsoft is changing it. The old service has been rebranded Office Live Small Business. The second service, Office Live Workspace, is more of a mystery. Microsoft had a collaboration Live SKU running in perpetual beta. My guess is that Workspace is more an extension of the Office collaboration SKU than something wholly new. I really can't say how much different until the service launches, and Microsoft isn't really saying when.

I asked Jaffe, who said that "customers would actually be using it later this year."

Microsoft will make Live Workspace available for free as an "Online extension of your Office experience," Jaffe said. That's not Web 2.0, but Desktop 2.0 or perhaps Office 2.0. Users without Office can view or comment on documents. Real collaboration requires Office.

Microsoft Hosts for Enterprises
Office Online is essentially Microsoft offering hosted versions of its server software to businesses with 5,000 or more employees. Microsoft already licenses most server software for third-party partner hosting. With Online, Microsoft hosts services Office Communications, Exchange and SharePoint for its customers.

The advantages are several. As I explained in July, Microsoft's bottom line software-plus-services objective is rent. Microsoft covets recurring revenue, like it gets from annuity volume-licensing contracts and has long sought from subscription deals. Related to this is that Microsoft wants to get customers using the newest software. Subscription services can do just that, creating sales pull for newer Dynamics and Office product versions.

Cost is uncertain. There is no price list for customers, which should be disconcerting for IT managers. Pricing is much clearer from some other hosted software services, such as Salesforce.com. Microsoft will charge on a per-user, per-month basis. But not everybody will pay the same.

"It's impossible to answer in a broad generalization," Jaffe responded to my question about pricing. He said that there were too many factors that could affect how much a business might pay per user, per month. Oh, is it like those jewelry stores where items under glass have no prices visible? For shame!

Jaffe did explain where enterprises could get more bang for the buck from Microsoft than—and these are my words—competitors or partners.

"If customers have Exchange software, they can apply the dollars to the subscription," Jaffe said. He used Exchange as example. Same would apply to other server software for which Microsoft offers hosted services.

There's a certain marketing irony to Microsoft's Live Online. The company has long touted offline access as an important competitive advantage against hosted services from the likes of Salesforce.com or even Google. Jaffe acknowledged that users would need an Internet connection to access Live Online services. Can you say Live Offline?

That said, how else is the mobile worker going to access any server, whether on premises or hosted, if not with some kind of Internet access?