Microsoft to offer Web-streamed Office, combating Google Apps

Computerworld - Worried by the small but growing number of small businesses and consumers switching from Office to less expensive or free online alternatives, such as Google Apps, Microsoft Corp. plans to arm a key cohort of its formidable legion of business partners to help fight the threat posed by so-called Office 2.0 technologies.

Microsoft plans to conduct a yearlong test of a change to a key part of its license for Office 2007 that will, according to multiple sources, enable Web hosting service providers to offer the Office suite via an emerging technology called application streaming.

The sources said Microsoft will make the announcement early next week during its Microsoft Management Summit in Las Vegas.

If successful, the company will likely overcome its long-held fears about hurting its hugely profitable Office business and make the change permanent.

Microsoft "has been sensitive to whether it would cannibalize its own application business," said Neil Gardner, a vice president of marketing at application-streaming software vendor Endeavors Technologies. "They were also sensitive to the piracy side of it, of losing control over distribution."

Such a change could mean that Microsoft, with the huge data centers it is building, will start to stream Office directly to its customers, too.

It will be the second announcement by Microsoft this month that showcases its determination to fight growing competition from Google Docs, Yahoo's Zimbra, Zoho Office, ThinkFree and similar services.

Last week, Microsoft confirmed that it is beta-testing a low-end Office bundle, code-named Albany, that it will offer on a subscription basis.

Microsoft did not respond to a request for comment.

Talk is cheap; is the service?

News of the license change had already leaked out among members of Microsoft's hosting partner community, which had been campaigning for it for the past several years.

"What was frustrating for us was that Microsoft allowed Terminal Services for Office but explicitly disallowed application streaming," said Gardner, whose company is trumpeting the news on its Web site.

But others warned that Microsoft will have to price streaming Office low enough to make it competitive with the paid Enterprise version of Google Apps, which offers technical support for $50 per user per year, and competitive too with the free offerings.

"Why would a [small business] go out and pay an arm and a leg when they can get Google Docs or OpenOffice for free?" said Ty Schwab, CEO of Blackhawk Technology Consulting LLC, a Eugene, Ore., reseller of application streaming software. The price "has got to be close if Microsoft wants to make itself a force to be reckoned with."

Fording the streaming

Office 2007 as a streamed application is more similar technically to Google Apps than Albany, though all three share a subscription model.