From...

November 11, 1999
Web posted at: 9:35 a.m. EST (1435 GMT)

by Alexandra Krasne

(IDG) -- The next time you shop for an office software suite, you might not buy it from a computer retailer. Instead, you could subscribe to it on the Web.

Microsoft's Office Online is a lot like the boxed version of Office 2000, except for a few collaborative features and the small amount of space it takes on your hard drive. Office Online will be hosted on the Web, and you'll run only a 600KB file on your desktop.

You'll pay Microsoft a monthly usage fee when you log on to use it at bCentral, a portal for small and medium-size businesses that will offer Office Online next year. But you'll also be able to license Office Online along with services from about 15 partners, including Internet access providers, telecommunications services, and hardware vendors.

A stand-alone edition of Office costs between $400 and $800, depending on the configuration. For Online Office, you'll pay somewhere from $50 to $500 per month, per user, says Lisa Gurry, Office product manager.

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Renting applications online is an emerging concept, and Microsoft competitors are also getting into the act. Sun Microsystems is promoting its recently acquired StarOffice Suite as a Web-based application, and Corel has announced plans to offer a WordPerfect suite online.

Not for everyone

It also poses challenges: attracting consumers who are accustomed to owning their software, and maintaining usability.

Microsoft must redesign Office so the suite will work properly online, says Jeff Tarter, Softletter editor and analyst.

"A true remote execution has a tiny footprint and won't need much of a system," Tarter says.

Hosted software has advantages, Tarter notes. You always run the latest version, and don't have to install bug fixes or update drivers.

"I think it's a reasonable model. It eliminates flakiness of patching and upgrading software," Tarter says.

Microsoft knows it's not for everybody.

"One thing that we need to keep in mind is that not all customers want this," Gurry says. "Some want to work offline on an airplane, or do heavy graphics, but for some businesses this is a great opportunity."

Office Online requires Windows NT now, and will later run with Windows 2000. DSL access is also recommended.

Calling early adopters

You can soon see if it suits you. In December, Micron will bundle technical support for its PCs with Office Online.

"The infrastructure is in place. We just need to settle nerves," says Michael Gale, Micron's chief Web officer. "User comfort is a challenge. It's an uncomfortable process [to move to the Web] ... the first move into these areas is a big deal."

Micron's service will cost between $15 and $25 monthly.

Zona Research analysts call this a move toward greater reliance on the Web.

"This announcement is merely the beginning of Microsoft's journey toward being an Internet software company, not simply a desktop software company that recognizes the importance of the Internet," analysts observe in a Zona report.

Microsoft downplays it, but "traditional software licensing, distribution, and access practices are about to undergo tremendous upheaval," Zona analysts note.

Gurry says Microsoft does not expect its boxed software to change for some time. But she expects Web application use to grow.

Tarter says partnerships boost growth.

"I wouldn't be surprised if someday Office comes as part of a basic cable service, for a few dollars a month," Tarter says. You could get a word processor, spreadsheet, and other applications along with your Internet access.