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Head In The Clouds? Microsoft Untethers Office 365

Microsoft's latest and greatest upgrade to its business productivity code—with a whole new cloud-based system—launches today. Will the cloud help or hurt Office's future?

Office 365

This is classic Microsoft: Its Office 365 product launches today, but we've known practically all about it for about eight months and had evidence it was on the way for at least two years. So it seems to have taken Redmond's code tricksters this long to get the design of the business software suite polished and ready for public consumption, including a protracted beta test phase in different nations. But it's here, ready, available, and suffused with the cloud-based goodness that's affecting all sorts of companies today, from Apple to Amazon to Google. It's a necessary step for MS, but there's a big danger here: It could be transformational; or it could be too little too late.

Why too late? Because, as the New York Times notes today, there are many companies busily involved in moving their entire business computing model over to Google's cloud-based apps and Docs systems. The attraction is obvious: They've been available for a while, so they're well known, and they've been improved to the point that though they're not necessarily technically the most advanced, they're definitely "good enough." Google's productivity suite lacks that whole "What the hell did Word just do to my document formatting?" issue. And they're cheap (though some industry watchers suggest that Google's products actually come with a hidden "tax").

True, Office 365 includes a browser-based interface for some of its functionality, and challenges Google on that front. And yes, Office 365 does seem to be competitively priced, with enterprise plans costing between $10 and $27 per user-month for different features, and small- to medium-sized businesses benefitting from a $6 monthly fee per user. So Microsoft is possibly challenging Google on this front too, offering something familiar, wrapped in a shiny new wrapper, for what seems a reasonable price.

But there's where another flaw comes in—Office is familiar. For many, that wonderful MS inertia—the fact that it's the same well-known old tools that your staff knows and loves—will be a big draw. But while Office is new, and there are some interesting collaboration powers, it's also not a total rebuild of the code. And that means many of the old flaws are there, too. Plus, the newly made-over interface in 365 actually will confuse old Office hands, and require some time to master. At this point, business managers could easily consider a switch to Google as being equally disruptive.

And that's what huge bodies like NOAA and the state of Wyoming have concluded. Plus Google is tending to keep these new clients, with upwards of 90% re-subscription rates. And with Google pushing its offerings in developing markets like India, where the reduced fees are even more relevant, it could easily start to make Microsoft look outdated. If that's the case, then CEO Steve Ballmer's promise of "hockey stick" growth in cloud services would look out of step with reality.

Chat about this news with Kit Eaton on Twitter and Fast Company too.

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