Microsoft Embraces Cloud Productivity With Office 365

Microsoft has a dominant stake in office productivity software. However–virtual monopoly aside–the trend has been moving from locally installed applications to cloud-based solutions for some time. Now, Microsoft is combining various cloud-based elements to offer a new productivity suite–Office 365.

Office 365 combines Office Web apps, SharePoint, Exchange, and Lync (formerly Office Communications Server) into a unified cloud-based offering. The iPad revolution and the explosion of tablet devices, combined with the improved functionality of smartphones, mean that more and more business productivity is conducted from platforms other than the standard Windows desktop, and make cloud-based productivity more critical than ever for businesses.

Despite recent high-profile departures from the Microsoft executive team–first Stephen Elop left to take the reins of Nokia, and now Chief Software Architect Ray Ozzie announced that he will be moving on–Microsoft has been on a relative win streak (the failure of the Kin notwithstanding). Windows 7, Bing, Internet Explorer 8 (and Internet Explorer 9) and even the Xbox 360 are all helping to restore some respect to the Microsoft name. The launch of Windows Phone 7 seems well received thus far, and could help Microsoft reclaim a significant role for smartphones.

However, when it comes to the cloud, Microsoft has been somewhat Jekyll and Hyde. The bread and butter of Microsoft’s empire relies on ensuring that Windows desktops and notebooks run locally installed Microsoft software such as the Microsoft Office productivity suite. Microsoft has realized that there are benefits to cloud-based productivity, and has had some tepid offerings in that area, but Microsoft hasn’t fully embraced the concept.

Meanwhile, Google has continued to aggressively pursue business accounts. Google is virtually synonymous with the Web, and it has a diverse collection of online tools and services that mirror the software offered by Microsoft in many ways. Google has tried to jump ahead of Microsoft in capturing the cloud-based productivity market.

Chris Capossela, Senior Vice President, Information Worker Product Management Group, offered up some profound hyperbole to mark the announcement of Office 365. “Chapter one in Microsoft’s history was about putting a PC on every desktop. Chapter two was dedicated to transforming the enterprise data center. Chapter three is, without a question, devoted to bringing the power of the cloud to our customers and partners. What’s exciting is that we’re writing the story right now – and there’s so much more to come.”

The Office 365 brand will encompass and replace current online initiatives from Microsoft, including Microsoft Business Productivity Online Suite (BPOS), Office Live Small Business, and Live@edu. Office 365 will be available in two forms: a small business offering for up to 25 users at a cost of $6 per user per month, and a more comprehensive solution aimed at larger businesses starting at $2 per user per month depending on the configuration.

Beginning today (October 19) at noon Pacific time, Microsoft will open a limited beta of the Office 365 program–available in seven languages, across 13 countries. The actual Office 365 suite is not expected to be officially available until sometime in 2011.