* Office for Web to be released in first half of next year
* Include free consumer version, two business versions
* Microsoft shares rise 2.7 percent
(Adds analyst comment, shares)
By Jim Finkle
BOSTON, July 13 Microsoft Corp (MSFT.O) will
release three versions of its dominant Office software that
users can access over the Web, catching up with products that
rival Google Inc (GOOG.O) launched three years ago.
The news helped send shares in the world's largest software
maker up up 2.7 percent by midday, more than double the gain in
the Nasdaq Composite Index.
It is the latest salvo in an intensifying war between
Microsoft and Google. [ID:nN08420017] Google announced plans
last week to challenge Windows with a free operating system.
Microsoft introduced a new search engine, Bing, last month.
"Microsoft is finally making the conversion through the
Web-based world. First, we saw that through Bing. Now we are
seeing that through Office," said Jefferies & Co analyst
Microsoft will offer for free to consumers Web-based
versions of its Office suite of programs, including a word
processor, spreadsheet, presentation software and a note-taking
Microsoft will also host one Internet business version of
Office at its own data centers, charging companies a yet-to-
be-announced fee. Companies with premium service contracts will
have the choice of running a second Web-based version from
their own data centers at no extra cost.
The company hopes to make money by using the free software
to lead users to its ad-supported websites, including Bing.
Analysts have said that Bing's early signs of success suggest
Microsoft may be rounding the corner in efforts to turn around
its money-losing Internet division.
Still, a free version of Office could hurt sales of
Microsoft's top-selling and most profitable unit. One of
Office's most popular titles is a home version that sells for
$150. It includes the four programs that Microsoft will give
"Microsoft is in a tough spot. Their competition isn't just
undercutting them. They are giving away the competitive
product," said Sheri McLeish, an analyst with Forrester
The Office division rang up operating profit of $9.3
billion on sales of $14.3 billion in the first three quarters
of the software maker's current fiscal year.
McLeish expects Microsoft to overtake Google in the market
as the hundreds of millions of people who use Office flock to
try out the Internet version.
Microsoft will release the web offerings when it starts
selling Office 2010, it next major release of the product,
sometime in the first half of next year. Its current version
came out in January 2007.
The software maker unveiled an early release on Monday at a
conference for business partners in New Orleans. It will be
distributed to tens of thousands of testers.
Company spokeswoman Janice Kapner said the free Web version
will provide "a very rich experience" and probably have more
functionality than Google.
Office 2010 is among a wave of upgrades to Microsoft
programs planned over the next year. A new version of its
ubiquitous Windows operating system is coming out in October
and a new version of its widely used email server is also in
Microsoft shares rose 2.7 percent to $23, while the Nasdaq
was up 1.2 percent at 1777.50
(Reporting by Jim Finkle; editing by Richard Chang and Andre