"In terms of competition, migrating Office to the cloud is critical," said Jim McGregor, a principal analyst with Tirias Research. "For Microsoft, Office is and should be the cornerstone of a much larger cloud-service strategy that I'm sure we will hear more about."
Microsoft presented the upcoming version of its ubiquitous Office suite on Monday, and the cloud was front and center.
Microsoft isn't ignoring its locally installed Office suite of tools, such as Microsoft Word and Excel. However, the company has been facing significant challenges in the wake of low-cost office alternatives and a growing migration to cloud-based applications, like Google Apps.
All of this means Microsoft's Office 365 suite of cloud-based apps is getting most of the attention in the upcoming release.
The software maker is also taking on today's multi-device workplace by enabling users to save their files to SkyDrive, its online document storage and file sharing service, and syncing content across all of the user's devices, including smartphones, Macs, PCs and tablets. That means a user can begin working on a project on her home laptop and pick up where she left off when she gets into the office and sits at her desktop.
Microsoft also focused on mobile users by making Office compatible with touch screens, which are generally used in smartphones and tablets. That's a close tie-in to the recent unveiling of Microsoft's Surface tablet.
"I've expected that the new Office would support true, seamless file synchronization across mobile and desktop environments," said Brad Shimmin, an analyst with CurrentAnalysis. "Such capability will be required, frankly, if Microsoft is to compete with Google over the long term ... It is paramount for productivity vendors like Google and Microsoft to provide a seamless working environment between desktop, laptop, tablet and mobile phone."
Shimmin said Microsoft has to step it up because Google, its biggest competitor, is making inroads in the cloud-based Office app space.
"In short, Google has aggressive pricing, rapid innovation, simplified management, adequate security and governance, and strong ties between consumer and professional technologies and applications," Shimmin said. "I don't believe this [Office update] will bring Microsoft on par with Google in terms of capability and appeal within Google's existing customer base."
According to a May report from research firm Gartner, Google is far outpacing Microsoft in the cloud business. Compared with Microsoft, Google is winning one-third to one-half of new, paid-for, cloud-based office system seats, the analyst firm reported.
"Google's call to action is appealing to organizations generally not pleased with their current situation," Gartner noted. "Primarily, the disaffected are moving to Google Apps, legitimizing that choice, and helping Google grow its base and defy all the early predictions of Google's defeat."
Melissa Webster, an analyst with IDC, said a lot of aspects of Microsoft's cloud-based approach need improvement if the company is going to compete more aggressively against Google.
"The cloud is new for Microsoft, and there have been ease-of-deployment, ease-of-migration and some ease-of-use issues, though these are all getting attention," Webster said. "Microsoft needs to continue to innovate, but not just to compete with Google. It needs its customers to upgrade to new versions for pay."
Microsoft, despite its upgrades and focus on the cloud, still will have a tough fight on its hands if it wants to best Google.
"What Google is doing better than anyone is integrating all the applications and services they offer into one relatively inexpensive solution that is easy to use and seamlessly maintained," McGregor said. "As the Google applications mature and become more competitive with other standard applications, all the Google cloud applications will pose a greater threat to Microsoft."
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed . Her email address is firstname.lastname@example.org.