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Office 365: Microsoft's Next Big Cloud Platform

Consolidating brands and extending its services, Redmond makes sense of its online productivity offerings.

Microsoft put its biggest brand name behind its cloud computing bet on Tuesday by announcing Microsoft Office 365, the next generation of the company's online productivity platform.

The announcement points the way to a broader offering that will eventually sweep away a jumble of confusing brand identities including the Business Productivity Online Suite (BPOS), Microsoft Office Live Small Business and Live@edu.

In place of these services there will be one productivity platform that combines Office Online Web apps with SharePoint Online, Exchange Online and Lync Online (the latter being the new name for Office Communications Server).

Office 365 will enter beta testing immediately in 13 countries, with general availability in 40 counties and regions planned for 2011.

Described in terms of functionality, Office 365 delivers services-based versions of the Office productivity apps (Word, Excel, PowerPoint, and so on), e-mail, voicemail, enterprise social networking, instant messaging, Web portals, extranets, voice conferencing, video conferencing and Web conferencing capabilities.

A new Microsoft Office Professional Plus option adds a rich desktop client that matches all the capabilities of boxed Office Professional software but delivered in a pay-as-you-go approach.

The Office 365 pricing scheme acknowledges diverse businesses and user types. There's a distinct Office 365 for Small Businesses offering aimed at SMBs with one to 25 users and priced at $6 per month. That price is aggressive and likely aimed at the broadest swath of would-be Google Apps users. Unfortunately, it maxes out at 50 users, so midsize businesses need not apply.

Office 365 for Enterprises will offer multiple service levels, ranging from $2 per user, per month for an e-mail-only "kiosk" service (suitable for shop-floor workers) up to $24 per user, per month for Office 365 and the Office Professional Plus option. That gives businesses cloud services and on-premise software with a single subscription (though customers will no doubt seek a lower-cost, non-"Professional" Plus option that adds just core Word, Excel, Outlook and PowerPoint client capabilities).

Unlike Microsoft's current BPOS service, Office 365 is based entirely on the Office 2010 suite. That brings advances including single-sign-on across all services, online archiving and voicemail via Exchange, collaboration and social networking via SharePoint and audio and video conferencing via Lync.

The company also highlighted 24-by-seven support and a guaranteed service-level agreement of 99.9%, with refunds provided if SLA's aren't met.

Tuesday's announcement comes two years after Microsoft ventured into online services and more than seven months after Steve Ballmer, the company's president, declared the firm to be "all in" on cloud computing.

Making his first major appearance as President of the Office Division of Microsoft Office, Kurt DelBene said the question enterprises are asking has changed from "should we move to cloud computing" to "when should we move and what should we move?"

The transition to the cloud is more than business-model change from licensing to subscription-based computing, DelBene said. "It's one of the most impactful transformations that will happen in our generation, and we think it's similar in magnitude to the switch to graphical user interfaces."

To support what he described as the "biggest commitment Microsoft has ever made" in bringing customer infrastructure into Microsoft data centers, DelBene said the company has changed the way it thinks about its own systems.

Customers can now quickly tap "20 football fields of elastic IT capacity" from Microsoft data centers around the world, he said, adding that the company's services are now reprovisioned and updated every 90 days.

Microsoft said current BPOS customers will be able to transition to the new services on their own time table over the first year of the service, with subscription levels and pricing comparable to their current services. Live@edu users will see a combination of free services and fee-based services for administrative staff.

In a tidbit appearing near the end of Microsoft's press release, it was stated that Microsoft Dynamics CRM Online will become an add-on option to Office 365 sometime next year. That's a clear signal to and other enterprise players that Microsoft means to take its subscription model up the applications stack.

Microsoft has used the familiarity of Office as an enterprise leverage point for years. With Office 365, it's bringing the full force of the brand to the cloud.

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