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) 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.

With Office 365 you get what amounts to a two-for-one deal from Steve Ballmer: You get the Web-based office tools -- including limited versions of Outlook, Word and Excel and access to the company's Web servers and email tools -- and the ability to connect all that to on-premises versions of the Microsoft Office software on your computer.

Yes, it's confusing, but the two-for-one discount packs real benefits. First, at least in my first-blush testing, the Web-based riffs of Microsoft Office work pretty well. The stripped down, online versions of Outlook, Word and Excel behave mostly as their on-premises cousins do. And there are nice features such as Lync Online, which enables basic chat. The Web-based versions of SharePoint and Exchange support quality company intranets and secure email, at least in the single seat I am using. And with enough tinkering -- more on that later -- the PC-based full versions of Word, Excel and all the rest connect effectively to the Web-based system. Best of all, the whole system can be tightly managed from a central location, which offers a nice, cozy level of security.

So at least in theory, your business gets a relatively affordable means to have both the power of Web-based collaboration and the functionality of software that runs on your PC.

What isn't it?
Office 365 is neither a first-quality Web experience nor something you or your people are going to understand, at least to start.

For all the steps Microsoft has taken in making its software Web-ready, be warned: Office 365 cannot match the wide-open Internet in terms of collaboration or ease of use. Google Apps, for example, crushes this application when it comes to collaborative features. And installing Office 365, at least in this beta, is far from smooth. Software must be downloaded, connections established, licences managed and all the rest. For a generation of Web users weened on logging into Facebook and instantly typing their brains out, Office 365 takes some getting used to.

What do I do?
For sure, anybody with skin in the office software game should take a look at this beta, if only to get a feel for what Microsoft is up to. I expect you will find Office 365 surprisingly powerful. But(!) I would definitely hold off deploying this tool in an active office until the beta develops a bit.

It just too early to say whether Redmond's attempt to ride the Web wave will send them gracefully up on the beach ... or crush them utterly out on the rocks.

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