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In a telling move that indicates the momentum of cloud computing, Microsoft
this week placed into technical preview its forthcoming Web versions of its
juggernaut Office suite.

Originally announced at Microsoft’s Worldwide Partner Conference in July,
the now officially dubbed Office Web Apps are lightweight versions of their
on-premises counterparts. The technical preview program will provide access to
Word Web App, Excel Web App and PowerPoint Web App to a limited number of
testers called upon to provide suggestions and feedback to Microsoft. The
official release of Office Web Apps, which will eventually also include the
OneNote Web App, is expected in the first half of next year.

From a channel perspective, Microsoft has not yet offered up a reseller model,
nor pricing for the online suite. Office 2010, the desktop version, is expected
out next year as well, and Microsoft executives have said that they expect
Office Web Apps to be a complement to the more robust desktop version—not,
obviously, an either/or. The question remains though whether the Web versions
of these products will impact sales of Office 2010 for partners as customers
see the cost savings associated with cloud versions of this software.

Microsoft is feeling pressured to take its fabled productivity applications
into the cloud, given the momentum around Google Apps and other cloud-based
business software offerings, according to Shawn Wilke, president of Sheepdog, a
Nova Scotia-based reseller and Google Apps partner.

“It’s not just Microsoft feeling this pressure,
but all the traditional software vendors from SAP
to Sage,” Wilke said.

In fact, business software mainstay Sage this week announced that it is
piloting a cloud version of its Sage SalesLogix CRM
suite. There are also smaller players such as Box.net that are offering
Office-like productivity applications in the cloud as well.

Microsoft is in a bit of a Catch-22 situation: Go for the cloud all the way and
undercut your bread-and-butter revenue stream or go at it partially and it’s
hard to compete, Wilke added.

“If they are competitive with Google, they start to cut off all of their
revenue for on-premises solutions,” he said. “It undermines their whole
business model.”

Microsoft is positioning this play as all about customer choice and flexibility
to access Office applications from whatever device they are on or wherever they
are working. Office Web Apps will be available in three different ways:

  • Windows Live customers will have access via Windows Live
    SkyDrive.
  • Office 2010 volume licensing is available for business
    customers, hosted with Microsoft SharePoint Server on-premises. Today, these
    include more than 90 million Microsoft Office annuity customers.
  • Businesses will also have access to Office Web Apps through
    Microsoft Online Services.