Microsoft to offer free Web versions of Office applications

To compete with Google and others in the market of free software, Microsoft plans to offer free Web versions of Office applications, including Word documents, Excel spreadsheets and PowerPoint presentations.

The company made the announcement Monday at its Worldwide Partners Conference in New Orleans in a presentation about Office 2010, the upcoming version of its business-productivity software.

Microsoft will also offer a variety of hybrid Web options for paying Office customers who may not want to trust all their data to free accounts on Microsoft and Google.

Additionally, business customers will have the option of hosting Office Web applications on their corporate servers, or to have Microsoft host Office applications entirely on its cloud network.

The move is another sign of Microsoft's investment in cloud computing, a shift from software the customer owns and runs to software as a service that Microsoft or other data-center companies run on the user's behalf.

The different Office Web products are "a great example of the power of choice we're offering for IT [information technology] customers," Stephen Elop, president of Microsoft's Business division, said at the conference.

"On Day One when Office Web apps land, 400 million Windows Live customers, 90 million (subscription) customers — close to a half billion people — will have immediate access," he said. "Landing with a big step, that's fantastic."

Microsoft expects to start selling Office 2010 by June.

Google Docs and Sun Microsystems' OpenOffice.org have been nibbling away at Office customers who prefer to pay nothing for their word processing, spreadsheets and presentations.

Google launched Google Docs two years ago, first with a word processor, later adding spreadsheet and presentation software. The company says it has tens of millions of active users of Google Docs.

The latest version of OpenOffice.org, an open-source product, has been downloaded 60 million times, according to Sun.

"We welcome Microsoft's movement to the cloud," Google said in a statement Monday. "Choice is good for users, and their direction further validates that the future of computing is in the cloud."

While Microsoft's free Office Web applications will be more lightweight than the PC versions and may staunch the loss of customers to competitors, observers say it could also cannibalize customers that otherwise would pay for Office.

Microsoft's Business division, which develops the Office suite of software, is the second most profitable unit at Microsoft after the core Windows business.

In its 2008 fiscal year, the Business Division had $12.4 billion in profit on $18.9 billion in sales.

Office also includes software such as Visio, Project, SharePoint, Outlook, unified communications and customer-relations management applications.

Elop said Office 2010 will focus on three goals: connecting anywhere, enabling people to work together and making it easier to work with videos and images.

For instance, documents will have the same formatting whether viewed from the application on the PC or from a browser.

The ribbon, the graphical user interface that replaced drop-down menus in some Office 2007 applications, will be incorporated across the Office line. It will also be added into the free Web versions.

Elop demonstrated some other new software features Tuesday, including the ability to edit video in PowerPoint and the ability to create miniature cell-sized charts in Excel.

The Web versions of Office will work on Internet Explorer, Mozilla's Firefox, Apple's Safari and should work on Apple's iPhone.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com