Redmond, Washington — In a surprising move early this week, the software titan Microsoft Corp. intensified its battle with its arch rival Google, said it will move a limited version of one of its core businesses with the announcement of a free Office software suite to the Internet for the 400 million people who have its Windows Live service, to be launched next year — a direct challenge to Google and its online office productivity suite, Google Apps.
While it would pluck only a small bite out of Office revenues in the short term, the move represents one of the most radical steps yet by Microsoft as it tries to refocus its software business around the internet, according to analysts. The product, which would include lightweight versions of Word, Excel, PowerPoint and OneNote, would debut next year and compete with Google’s free online Google Docs suite.
War on all fields … Microsoft to compete with Google as they plan to release several Microsoft Office applications online. / File Photo
The announcement is the latest retribution in an increasingly intense rivalry between Microsoft and Google. The Mountain View search giant last week said it would soon launch an operating system dubbed as Chrome OS, designed to lure users from personal computers, Microsoft’s home turf, to using applications on the Internet, where Google has a dominant presence.
Microsoft introduced a new search engine, Bing, last month.
Roger Kay, software industry analyst with Endpoint Technologies Associates Inc. in Wayland, said Microsoft is attempting to remain competitive as many vital computing activities are moving online. “They are going to get at least their share as more and more of the market turns in that direction,” said Kay. “Microsoft is trying to get early stakes in the ground.”
The news helped shoot up shares of the world’s largest software maker up by 2.7 percent by midday, more than double the gain in the Nasdaq Composite Index.
“Microsoft is finally making the conversion through the Web-based world. First, we saw that through Bing. Now we are seeing that through Office,” said Jefferies & Co analyst Katherine Egbert.
Users of the free online Office will be able to create and edit documents, spreadsheets and Powerpoint presentations by employing tools they are very well associated with from the desktop software. Although only a “lightweight” version of the software, to make it more suitable for use over the internet browsers, it would still provide a fuller service than online rivals such as Google Apps, said Stephen Elop, head of Microsoft’s business division.
Editions of Microsoft Office software on display at a Best Buy store in Atlanta.
“Google represents a serious threat,” said Tom Austin, an analyst at Gartner, who analyzed the competition between the two companies to the browser wars that shaped the early internet. With the free version of its software, “Microsoft is responding as vigorously as it did against Netscape”, he added.
Monday, Microsoft demonstrated to a select group of technology-savvy testers an early look at Office 2010, but it is still keeping a the key development — its free Web-based versions of programs such as Word and Excel — under wraps a little while longer.
Company spokeswoman Janice Kapner said the free Web version will provide “a very rich experience” and probably have more functionality than Google.
Office 2010 is among a host of upgrades to Microsoft programs planned over the next year. A new version of its ubiquitous Windows operating system is coming out in October and a new version of its widely used email server is also in the works.
“We are delivering technology to help people work smarter and faster from virtually any location using any device,” said Chris Capossela, senior vice president of Microsoft’s Business Division.
Kay said the move to Internet-based software is bound to erode Microsoft’s competitive position over time. “I think in the long run their Office revenue is going to decline,” said Kay. “We are beginning an era where Microsoft is going to face increasing competition even in its core markets.”
Microsoft shares rose 2.7 percent to $23, while the Nasdaq was up 1.2 percent at 1777.50.