Microsoft launches services to compete with Google Apps

In another step onto Google's turf, Microsoft launched Office 365, a Web-based version of Office and e-mail rolled into a monthly service for less than the cost of a Netflix subscription.

The new Office 365 is the answer to Google Apps, a Web version of word processing and spreadsheets that Google offers to businesses for $50 per year. Microsoft's new basic service will cost $72 a year. Microsoft said people can start signing up for a free test version, and the service will start selling next year.

"Customers will get the best of everything we know about productivity 365 days a year," said Kurt DelBene, the new president of Microsoft's Business division, at a Tuesday news conference in San Francisco.

It's one of the many ways Microsoft is pushing into cloud computing: selling software served from and stored in the company's giant data centers.

"We believe it's one of the most impactful transformations that will happen in our generation," DelBene said of the cloud.

For businesses with fewer than 25 employees, Microsoft is offering the $6 monthly service that combines Office Web Apps — Word, Excel, PowerPoint — with SharePoint for collaboration, Exchange for e-mail and Lync for communications.

For larger businesses, Microsoft can offer a combination of services for $2 to $27 per user, so that companies can scale the package software for different types of employees, whether they're factory workers or accountants.

The new brand, Office 365, replaces the former products named Business Productivity Online Suite, also known as BPOS, Office Live Small Business and Live@edu.

The Herbfarm restaurant has been using Exchange online for a year. Chefs use it to update each other on what's available from purveyors, check in with gardeners on how many squash blossoms they need for dinner, and update and print the menu for diners.

They used to run Exchange on their own servers.

"When we had Exchange services in-house, it was taking up a lot more of my time and resources and taking that away from my guest-services support," said Thomas Chambers, who manages guest service and IT support for the Woodinville restaurant.

"We flipped the switch about a year ago on Online Services and since then I haven't had to think about our Exchange service since."

The staff of about 30 will start testing Office 365 soon.

While Office 365 may keep Google at bay, Microsoft may find itself competing with partners who resell and support its software.

"They're going to have to make sure they have a comprehensive strategy that engages their partners," said Jonathan McCormick, chief operating officer of Intermedia. The Sunnyvale, Calif., company is a Microsoft partner that provides communication software integrated with Exchange for businesses.

"It is both sort of competitive and not competitive," he said.

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