Microsoft says next Office suite will go on the Web

LOS ANGELES Tue Oct 28, 2008 7:51pm EDT

Attendees at the 2008 Microsoft Professional Developers Conference play on Microsoft Surface in Los Angeles October 27, 2008. Microsoft Surface is a multi-touch product from Microsoft which is developed as a software and hardware combination technology. REUTERS/Fred Prouser

Attendees at the 2008 Microsoft Professional Developers Conference play on Microsoft Surface in Los Angeles October 27, 2008. Microsoft Surface is a multi-touch product from Microsoft which is developed as a software and hardware combination technology.

Credit: Reuters/Fred Prouser

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LOS ANGELES (Reuters) - The next upgrade of Office business software from Microsoft Corp will include a version that edits word processing documents and spreadsheets inside a Web browser, the software maker said on Tuesday.

The online version of Office, which includes the Word and Excel programs, aims to prevent competitors such as Google Inc from pecking away at Microsoft's dominance in software used by office workers and expand the market for one of its most profitable products.

Microsoft would not comment on when it plans to release the next version of Office, dubbed "Office 14," but in the past it has shipped an upgrade every two to three years. It introduced the current Office suite of programs in January 2007.

The company said Office Web applications will offer lightweight, online versions of Word, Excel, PowerPoint presentation software and the OneNote collaboration program. Office files can be managed and edited on a normal desktop computer, a Web browser or a mobile phone.

Microsoft, the world's largest software maker, has seen a wave of competitors from Web start-ups to Google offering word processing, presentation and spreadsheet software over the Internet for free with advertising or a monthly subscription.

"Nobody, none of our competitors, will do as good of a job on the phone, the browser or the PC," said Chris Capossela, a senior vice president at Microsoft's Office business.

The company announced the news at the Professional Developer's Conference, Microsoft's annual gathering of engineers to detail the company's future plans.

Microsoft has mostly resisted the push to make its Office suite available online, choosing to sell licenses to run the applications locally on a single computer. It allows users to share files through Office Live, which is free with advertising or available with more functions for a monthly subscription.

Google Apps, a free suite of Web services aimed at business users, includes calendar, collaboration, e-mail and messaging software, as well as online spreadsheets and word processing.

Microsoft's announcement did not surprise David Girouard, president of Google's enterprise division, who saw the move as an endorsement of its business model for running programs in its powerful data centers and delivering those applications as services over the Web.

"It's an acknowledgment of all the progress we've made with Google Apps in the last 18 months," said Girouard, noting that Google has 10 million business users running Google Apps.

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Microsoft said the new Office Web applications will be available for consumers on Office Live, although it did not disclose whether it would be paid for by advertising or subscriptions.

For large corporate customers, they can either pay for a license to run those applications online using their own computer servers, or run those programs in Microsoft's data centers for a monthly fee.

Microsoft said users will be able to view Word documents or Excel spreadsheets in the same way regardless of whether they are using a Web browser or on a standard desktop. The online Office version also has a similar look and feel to the desktop applications, albeit with less functions.

The new Office Web applications will work on Internet Explorer, Mozilla's Firefox and Apple Inc's Safari browsers. They will be available for a technical preview sometime this year, according to Microsoft.

Capossela sees the applications expanding the base of Office users, notably employees who do not work on a computer sitting on a desk -- nurses, truck drivers or factory workers -- but require some business software accessible over the Web.

It also offers, Capossela notes, the opportunity to make money in the form of advertising or subscriptions for a software product that is heavily pirated.

"We have a huge number of users. Very few pay us. There is a huge opportunity for us in this space because we can get revenue from people we are not getting anything from," said Capossela, who did not elaborate on the effect the new service would have on Office's profit margins.

In the September quarter, Microsoft's Office business division was the biggest revenue and profit driver, outgaining even its bread-and-butter Windows unit.

In the previous fiscal year, the Office unit generated $18.9 billion in revenue and $12.4 billion in profit.

(Editing by Derek Caney and Andre Grenon)

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