UPDATE 1-Microsoft launches 'cloud' version of Office

* Office 365 test version available Tuesday

* On sale worldwide next year

* 'Cloud' version challenges Google Apps

* Microsoft shares down 2.7 pct; Google down 1.1 pct (Adds product details, pricing)

SEATTLE, Oct 19 (Reuters) - Microsoft Corp (MSFT.O) launched a fully online version of its popular Office suite of applications on Tuesday as it looks to extend its customer base and beat back rival Google Inc (GOOG.O).

The new service, called Office 365, is available as a test from Tuesday in 13 countries, and will be on sale on a subscription basis worldwide next year.

Combining some of Microsoft's existing cloud-based services, it will be available through most browsers, including Mozilla's Firefox, Apple's Inc's (AAPL.O) Safari and Google's Chrome, and can be used on mobile devices such as Research in Motion Ltd's (RIM.TO) BlackBerry and Apple's iPad.

That means customers can get access to Office programs like Outlook e-mail, SharePoint websites and simplified versions of Word and Excel without installing software, from virtually anywhere. Customers get access to more features when the software is also installed.

The move strikes a blow against rival Google, which has had some success with its Google Apps service, which provides a low-cost, Web-based alternative to Microsoft's traditional Office software for $50 per user per year.

Microsoft will offer the service to small companies with fewer than 25 employees for $6 or 5.25 euros per user per month.

For larger companies and government organizations, prices will start from $2 per user per month for basic e-mail. A fuller "professional" version will cost up to $27 per user per month.

Office is one of Microsoft's biggest money-earners, alongside its Windows operating system. The unit that makes Office accounted for almost 40 percent of the company's profit last year.

The new service was announced by Kurt DelBene, the new head of the Office business since the beginning of this month. He took over from Stephen Elop, who left to lead phone maker Nokia (NOK1V.HE) last month. [ID:nN30254503]

Shares of Microsoft were down 3.1 percent at $25.01 on Nasdaq, while Google fell 1.7 percent to $607.14. (Reporting by Bill Rigby; Editing by Lisa Von Ahn and Gerald E. McCormick)