Microsoft debuts Office 365 cloud

October 26th, 2010 | by Aaron Tan

Microsoft made a dash for the business cloud computing market last week with Office 365, a cloud service that repackages its two-year-old Business Productivity Online Suite (BPOS) under a new brand.

The BPOS suite previously included Exchange Online for e-mail and calendaring; SharePoint Online for portals and document sharing; Office Communications Online for presence availability, instant messaging, and peer to peer audio calls; and Office Live Meeting for web and video conferencing.

The enterprise version of Office 365 includes the Office Professional Plus desktop software, Office Web Apps and previous offerings in the BPOS suite for US$24 per user/month.

The SMB version, which costs US$6 per user/month includes Office Web Apps, Exchange Online, SharePoint Online and Lync Online (previously Office Communications Online).

With this latest cloud offering, Microsoft is making an attempt to challenge Google Apps Premier Edition, which has been successful in the SMB segment.

Guy Creese, research VP at analyst company Gartner, noted that Microsoft had no direct answer to Google Apps Premier Edition – until Office 365 came along.

“When pressed, Microsoft would mutter, ‘Well, we have BPOS, a much richer communication/collaboration solution, and no one really wants an online productivity suite to live in. Office Web Apps is an adjunct to the Office software, rather than a replacement for it.’ Now, Microsoft can avoid the marketing gymnastics and just propose Office 365,” Creese said on a Gartner blog.

That may be true for Office 365’s large enterprise users, but for SMBs, the absence of a full-featured online suite in Office 365 means they’ll still have to invest in desktop Office software. Office Web Apps, as an extension of the Office desktop suite, is still limited in features.

And being an SMB does not mean you don’t need slide transitions and templates – features that are currently lacking in PowerPoint Web App.

Kurt Delbene, president of the Office division at Microsoft said Office 365 is “the best of everything we know about productivity, all in a single cloud service.”

“With Office 365, your local bakery can get enterprise-caliber software and services for the first time, while a multinational pharmaceutical company can reduce costs and more easily stay current with the latest innovations. People can focus on their business, while we and our partners take care of the technology.”

The best of everything in Microsoft Office. however, is still not on Office 365, for the obvious fact that the Office franchise remains a cash cow for the company.

At some point, Microsoft needs to revisit its “software+services” strategy and start offering a complete Office suite on the cloud. With its Office brand name and the emergence of HTML5 for developing feature-rich applications, Microsoft has what it takes to future-proof itself.

But first, it needs to get over the desktop and embrace the cloud – fully.

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