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Microsoft Office 365 Can't Beat Google in Beta

For better or worse, Microsoft (MSFT) is starting to hang ten on the office apps wave.

Remember the good old days of say, 18 months ago? Google (GOOG - Get Report) ruled the Web-based business app seas with its Google Apps line of office software tools. And Microsoft was king of the so-called on-premises office world -- that is, the Microsoft Office line of Word, Excel, PowerPoint and all the rest that runs from the PCs sitting on office desks.

That was then. Now is now. Several weeks back, Microsoft quietly rolled out a powerful beta version of its flagship Microsoft Office line of tools that represents a profound new direction for the company by blurring this online/on-premises software battle line.

Unlike those old days, Redmond is not looking to sell you pricey copies of work software such as Word, Excel and PowerPoint and load that code on hard computers linked with collaboration tools such as SharePoint and Exchange -- the software that hosts a company's websites and email. Instead, Redmond will lease access to a blended system of Web-based office and collaboration tools and its traditional on-premises office software.

Called Microsoft Office 365 -- because, hey, you get dizzy just thinking about it, I guess -- the service attempts to enable enterprise-level office collaboration through the entire suite of Microsoft tools. And at much a lower cost, at least to start. Office 365 runs $6 per person, per month, exclusive of the cost of the local on-premises software. That's a fraction of the thousands a fully loaded SharePoint or Exchange server runs.

"It is Office as we intended it to be," says Elisa Graceffo, group product manager at Microsoft, who gave me a lengthy demo of the product.

I have been testing Office 365 in my own six-person small business for a few weeks. Much reporting has yet to be done -- this is one massive program -- but already several major trends are obvious for businesses.

Just what is it?
Office 365 tries to bring all the benefits of centrally administered business-class software to a Web-based environment even the smallest of businesses can use.
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