June 28, 2011 – Microsoft formally unveiled Microsoft Office 365, the cloud-based update of its work applications meant to beef up its position against the growing popularity of virtualized offerings from Google and others.

Microsoft Office 365 includes the company’s Office, SharePoint Online, Excel, Exchange Online and Lync Online as an on-demand service with a monthly subscription, according to a news conference Tuesday led by CEO Steve Ballmer. Updates to the applications include enhancements to its video conferencing capabilities and collaborative note taking application, OneNote. The typical price range touted by Microsoft was from $2 to $27 per user per month. Microsoft stated that it also plans to expand its integrator, vendor and reseller partnerships around the new cloud service.

With no mention of competitors and no question-and-answer period, Ballmer and Microsoft executives rolled out a few application uses and case studies to push the cloud service, which is "focusing on small and midsized businesses."

“We really have a big opportunity to continue to drive productivity and collaboration around the world by bringing the benefits of Microsoft Office to the cloud,” Ballmer said from the Web conference from New York.

The service was introduced in beta in 2010, and tested by more than 200,000 organizations, according to Microsoft. Microsoft’s email platform Outlook and other collaboration tools had already found popularity as a cloud offering with government agencies.

The initial announcement last year received some criticism, including Information Management’s Jim Ericson, who said the new Office seemed more like a service offering than a cloud deployment.

With a reported nine out of 10 computers running a desktop version of its Office applications, the new service announcement comes as Google reports more than 30 million users of its online productivity offerings. Rivals HP, Oracle and IBM have all made big splashes in various facets of cloud deployment over the last year as well.

Matt Cain, analyst with Gartner Research, says Microsoft’s move ushers in a new era of how enterprises access their computing technology, though he warned that any problematic deployment could dampen some enthusiasm. Ultimately, Cain sees both Microsoft and rival Google benefiting from attention and adoption of Office 365.

“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,” Cain says.

Constellation Research CEO and analyst blogger R “Ray” Wang said the move is defensive on Microsoft’s part, and enables the company to fulfill more of its cloud strategy. Sean Hackett, cloud research director at advisory, TheInfoPro, also noted an anticipated bump for both businesses from the release. In addition, Hackett says the Office 365 launch “reaffirms Microsoft’s commitment to the SMB.”

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