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Prepackaged software giant Microsoft uncorked its latest online business productivity service, dubbed Office 365, today.

It's essentially a re-branding exercise by Redmond, which has replaced the firm's clunkily-named Business Productivity Online Suite (BPOS) of apps with a cloud-based offering for biz customers.

That's because Office 365 is really hamstrung if a customer doesn't also licence the desktop version of either Office 2010 Professional Plus or Office 2007 SP2 on their computers.

Microsoft is hoping the gambit of enticing customers into the cloud, where it has suffered some recent wobbles, will pay off for what it sees as a new lease of life for its Office, SharePoint, Exchange and Lync software.

The company said today that 200,000 people had tested the beta version of Office 365 since it was released in November last year.

Microsoft claimed businesses using the test build had reduced IT costs by up to an estimated 50 per cent.

Monthly price tags from $2 to $27 per user, per month have been slapped on Office 365, which is available in 40 markets.

"With Office 365 for small businesses, customers can be up and running with Office Web Apps, Microsoft Exchange Online, Microsoft SharePoint Online, Microsoft Lync Online and an external website in minutes, for $6 (US) per user, per month.

"These tools put enterprise-grade email, shared documents, instant messaging, video and web conferencing, portals, and more at everyone’s fingertips," said the software maker.

MS boss Steve Ballmer billed the offering as "where Microsoft Office meets the cloud". He also reminded everyone at a gathering in New York today that over one billion people worldwide used a version of his company's productivity suite, with Office 365 "collaboration meets productivity," he said.

Ballmer was also keen not to exclude the SME segment of customers, which is unlikely to benefit from the full suite of goods offered by Office 365, given that many SMEs won't qualify for Office 2010 Pro Plus, which comes with a subscription fee aimed at punters who spend quite large sums of money with Microsoft.

Traditionally, smaller businesses are quicker to shift to newer tech, in part because they have less legacy software and fewer staff on their books.

In contrast, larger businesses are much slower to upgrade at an enterprise level.

Perhaps that's why Ballmer made the SME play today. But arguably, Microsoft's Office suite is popular among biz customers because its content, unlike that of Google's current Apps product, can be stored offline.

Microsoft is undoubtedly taking a measured approach by keeping its software on the desktop for some customers as well as online. It is unclear if MS has got the balance right. Some argue, too, that the vendor has arrived late in the cloud.

Whether Office 365 is too little too late remains to be seen, however. ®

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