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Microsoft's Office 365 Goes Cloud, Beta

NEW YORK ( TheStreet) -- Microsoft (MSFT - Get Report) has finally planted a bigger stake in the cloud with a Web-based Office 365 software rental service.

The Redmond, Wash., software giant says it will start selling subscriptions to its Office 365 programs like Office and Exchange email for $6 a month to small businesses worldwide next year, after beta tests in 13 countries this year.

The announcement is just the latest leg in Microsoft's slow journey toward cloud services, following its Windows Azure effort two years ago. The move also comes just a day ahead of Apple's (AAPL - Get Report) new Mac operating system introduction Wednesday.

Apple is expected to include some cloud-based services related to the completion of its North Carolina data center. Analysts say it is possible that Apple may showcase some of its cloud-hosted applications with the announcement of its next OS.

Microsoft's 365 introduction also follows the surprising departure Monday of software chief Ray Ozzie, who spearheaded the cloud strategy for Microsoft and now leaves with "no plans at this time," according to an e-mail Steve Ballmer sent to employees Monday.

Microsoft has been under pressure to move more of its business and so-called productivity software to the Web in response to Google (GOOG - Get Report). In addition to Gmail, Google offers Google Apps, a range of Internet-based services like word processing, calendars and spread sheets, for free. Google also offers Google Apps professional for $50 a year to businesses.

Microsoft shares were down 3% to $25.05 amid widespread selling in tech and the broader market Tuesday.

--Written by Scott Moritz in New York.

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