Office in the Cloud, take two

In the small-business market, the forthcoming Office 365 may compete against Google Apps, but the stakes are much bigger

Earlier this week I offered my first take on Microsoft's announcement of its forthcoming Office 365 bundle, which will include Microsoft-hosted versions of SharePoint, Exchange, Office Web Apps, and Lync Server -- plus a new desktop version of Office dubbed Office Professional Plus. My initial reaction was that Office 365 seemed too expensive and, for a cloud offering, too anchored to the desktop.

As it turns out, I was wrong about one important detail: You actually will be able to subscribe to Office 365 small-business edition even if you don't have a locally installed version of Microsoft Office. (The Office 365 website lists Office 2007 SP2 or Office 2010 as a requirement, but what that really means, according to a Microsoft spokesperson, is that the small-business version of Office 365 integrates with those two Office versions only.)

[ Also on InfoWorld: Read Woody Leonard's excellent analysis of why Ray Ozzie left Microsoft. | And check out Neil McAllister's comparative review of "Office suites in the cloud: Microsoft Office Web Apps versus Google Docs and Zoho." ]

So if a small business wanted to, it could decide to adopt Office Web Apps in Office 365 as its primary productivity applications, just as some are opting for Google Apps today.

Microsoft says it still thinks the "vast majority" of Office 365 users will continue to use the desktop version of Office -- in the enterprise edition, the desktop-bound Office Professional Plus is bundled. And the small-business version tops out at 25 seats, so you won't see big businesses trying to save money by downgrading desktop Office users to Office Web Apps.

But the possibility remains that many small businesses -- at least, those that lack Office 2007 or better -- may forget about desktop Office and switch to Office Web Apps and the rest of Office 365 at a total cost of $6 per user per month. That's competitive with Google Apps Premier Edition, which costs $50 per user per year.

Reality check: Very, very few people use browser-based apps as their primary productivity software (although millions of people, including me, use the free versions of Google Apps for collaboration). More importantly, everything about Office 365, which we haven't even see in beta yet, depends on execution -- Web Apps plus the full array of Exchange, SharePoint, and Lync servers, with single sign-on and federated identity, is an awful lot of stuff for Microsoft to handle on behalf of customers in the cloud.

And there's yet another contingency: Office Mobile. Microsoft knows it must create a compelling experience for Office 365 users on mobile devices. Windows Phone 7 must evolve in tandem

My initial take on Office 365 -- that it was mainly a repackaging and upgrade of BPOS -- minimized the high stakes involved. This is not hand-waving. I am more and more convinced that Office 365 is a monumental gamble that represents Microsoft's cloud strategy for the post-PC-centric era. Can Microsoft pull it off?

This article, "Office in the Cloud, take two," originally appeared at Read more of Eric Knorr's Modernizing IT blog and get a digest of the key stories each day in the InfoWorld Daily newsletter and on your mobile device at

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