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Microsoft girds Office 2010 with free Web versions

Adds free Office Web versions for enterprise and consumers, paid Web app for SMBs

By Eric Lai
July 13, 2009 09:30 AM ET

Computerworld - Choosing to risk cannibalizing its own sales rather than let competitors such as Google Inc. eat away at them, Microsoft Corp. will give consumers and corporate users free access to the upcoming Web version of Microsoft Office.

Microsoft announced Monday that its Office Web service will be available to members of its free Windows Live online service, of which there are about 400 million active users worldwide today, says Chris Capossela, senior vice-president of the information worker product management group at Microsoft.

Office Web will also be free to enterprise workers, provided they are licensed for Office's software maintenance program, called Software Assurance. There are 90 million such workers today, Capossela said.

Office Web will also be available as a paid standalone service competing with Google Apps, which came out of beta last week.

To accommodate the three new Web versions of Office, Microsoft will reduce the number of client versions of Office 2010 to five from eight in Office 2007.

At its annual Worldwide Partner Conference in New Orleans, Microsoft will also announce that Office 2010, along with related Office products SharePoint Server 2010, Visio 2010 and Project 2010, have reached the technical preview stage. It will begin inviting tens of thousands of people to begin testing the Office 2010 suite, which is expected to ship in the first half of next year.

A beta for the remaining Office 2010 products, including Office Web, will begin by the end of the year, Capossela said.

Fear of a free Web

Microsoft has long been viewed in many quarters as being afraid of moving Office to the Web for fear of killing the goose that lays golden eggs.

Office generates about $15 billion to $20 billion a year for Microsoft, which is second only to Windows.

Despite its aggressive, albeit-belated move, Microsoft isn't endangering its Office sales, Capossela said.

For one, Office Web will only offer lightweight versions of Word, Excel and PowerPoint that lack many features. Even the most price-sensitive consumers will still want to buy a fuller-featured, easier-to-use client version of Office, Capossela said.

"If you talk to a student who is writing a ten page class paper, writing something that long in a Web browser is probably not the best experience," he said.

Microsoft has long offered lower-end products that in theory could have -- but did not -- cannibalize Office, such as Works or WordPad, said Capossela.

He said that even if consumers and small businesses move en masse to Office Web, that won't be so bad, since the revenue per customer wasn't that high. Many were using older versions of Office or simply pirating the software, he said.

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