Last October, Microsoft announced Office 365, a new product (replacing something called the Business Productivity Office Suite, or BPOS) that ties together an array of offerings into one Web-hosted service. Today, it’s launching a public beta, which you can sign up for at Office365.com. It’s letting folks into the service in batches, so expect a bit of a wait until you can try it out; the final version should go live later this year.

Office 365 enters the market as the instant archrival of Google’s Google Apps, but the two services are anything but exact counterparts. Philosophically, they’re at odds: Google Apps is based on the idea that you’ll do most or all of your work using Web-based apps, resorting to a traditional suite such as Microsoft Office either not at all or only in a pinch. (Google continues to acknowledge that many businesses aren’t ready to dump Office by introducing features designed to make Apps and Office work better together.)

Microsoft, oddly enough, thinks that most companies don’t want to get rid of Office in its traditional software form. So Office 365 is designed to supplement old-school Office rather than render it irrelevant, by making it easier to deploy and manage Microsoft Web-based services that complement the Office suite, including the Exchange e-mail platform, SharePoint collaboration, and Lync communications system. (You can either continue to buy the desktop suite the old fashioned way, or pay for it on a subscription basis as part of Office 365.)

Office 365 also builds in the Office Web Apps versions of Word, Excel, PowerPoint, and OneNote, junior-sized versions of their desktop antecedents which are still pretty limited when it comes to features, although they do a nice job of rendering documents properly. You can also use the Office Web Apps for free, but the freebie editions are aimed at consumers and tie into Hotmail and Microsoft’s SkyDrive service; the Office 365 ones work with Exchange and SharePoint and are therefore much better-suited to business use.

Various versions of Office 365 are aimed at organizations of all sorts, from one-person professional service firms to megacorporations. A version called Plan P1 is designed for small businesses, giving them hosted Exchange, SharePoint, Lync, and Office Web Apps for the reasonable price of $6 per user per month.

To riff on Google App’s oft-repeated concept of “Going Google,” Office 365 provides a one-stop way to Go Microsoft. I think that the small businesses who will find it most attractive are ones who are already serious, reasonably happy Office users and are comfortable with the idea of becoming even more Office-centric–not malcontents who are tempted by Google Apps. For instance, while you can use Outlook with any e-mail server, using Office 365 provides access to a bunch of features which are dependent on the Exchange server, such as full-blown workgroup calendaring, without requiring you to set up an Exchange server.

Me, I still find myself veering between Google Apps and desktop Office, depending on what I’m doing. I want it all: apps as powerful as old-school Office that live in the browser like Google Apps, with both Google’s painless collaboration features and the Office Web Apps’ slick document rendering. It’s going to be great to watch Office 365 and Google Apps duke it out, but both Microsoft and Google have a long, long way to go. Google, in fact, is still adding extremely basic stuff like pagination and doesn’t quite have an answer for the question “how do I stay productive when I don’t have an Internet connection?” And Microsoft is still financially and emotionally invested in desktop software in a way that may limit the ambition of the Office Web Apps. (We’ll know that’s changed when a fairly serious Office user can look at the Web apps and say to him or herself, “Hey, I could use this for 90% of my work.”)

For more details on Office 365, check out Elsa Wenzel’s story over at PCWorld.

 
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