Update: Microsoft Office 365 goes live

The release follows a nine-month beta program (see video below)

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The primary competitor is Google's Apps suite, which industry experts consider the biggest threat to Microsoft's communications and collaboration products, both on-premise and on the cloud.

Since the announcement of Office 365 in October of last year, expectations have been growing, and Google has been intensifying its competitive rhetoric.

"While Office 365 does put Microsoft in mortal combat with Google, it is not really an existential threat for Google since Microsoft is essentially validating the model that Google pioneered with Google Apps. I would expect that Office 365 actually heightens interest in Google Apps," Gartner analyst Matt Cain said via e-mail.

Ultimately, time will tell how successful the concept of cloud-based productivity and collaboration tools ends up being. "Time, and I mean 3-5 years, will prove or disprove the soundness of the model in terms of economics, security, stability and functionality. The first 20% of the business community that moves to the cloud will act as a proxy for the rest of the business world," Cain said.

In recent months, Microsoft has struggled with several major outages affecting BPOS, which have made some critics question whether Microsoft will be able to live up to its 99.9% uptime service level agreement for Office 365.

With Office 365, Microsoft is also trying to consolidate the branding and technology base for various cloud-based suites it has developed in recent years, such as BPOS, Office Web Apps and Live@edu.

Overall, Office 365 will offer hosted productivity applications -- word processing, spreadsheet and presentations -- e-mail, calendar, contacts, instant messaging, Web meetings, videoconferencing, intranet and website creator tools.

Office 365 has also been designed to interact natively with the on-premise versions of SharePoint, Exchange, Lync and Office.

Forrester Research analyst T.J. Keitt calls Office 365 "a solid entry" in the cloud collaboration software suite market whose functionality is either on par with or exceeds that of rival products.

In addition, the different Office 365 options let Microsoft position it for small and medium-size businesses as well as enterprises, where IT administrators get flexibility over the amount of functionality they offer to different types of employees, he said via e-mail.

"There are obviously issues of feature parity between Lync Online, SharePoint Online and Web Apps, and their on-premises relatives, but Microsoft promotes a hybrid model -- keeping some stuff on-premises -- that will let enterprises be strategic in what they move to the cloud," Keitt said.

Existing BPOS customers have a window of 12 months to migrate to Office 365, a process that Microsoft maintains will be straightforward, even for small businesses.

However, Office 365 doesn't work with some older Microsoft desktop and server software that BPOS still supports, so customers, especially those who want Office 365 to interact with on-premise Microsoft applications, will likely face the need to do software upgrades.

For example, Office 365 can't be used with desktop Office versions earlier than Office 2007 SP2, which means it doesn't work with Office 2003 and Outlook 2003.

Copyright © 2011 IDG Communications, Inc.

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