Microsoft plans to take Office applications online

Microsoft president Steve Ballmer yesterday said the company plans to make office productivity applications available over the Web, but the demand for the service among corporate users appears limited, several observers said.

While Ballmer didn't provide any details, he announced the plans in a press conference call confirming the widely rumored appointment of former Silicon Graphics Inc chief executive officer Rick Belluzzo as vice president of Microsoft's consumer and commerce group.

Microsoft's announcement that it will host its Office suite of applications on the Web follows an announcement by Sun Microsystems that it will provide office applications from Star Division, which it plans to acquire. But analyst Amy Wohl of Wohl Associates, said Microsoft has been pondering making Office available on the Web for months. The software giant isn't simply trying to confuse the market with its announcement, she said.

Wohl said over the past several months she has spoken with application service providers, which she didn't name, who claimed to have negotiated with Microsoft to host office applications online. Microsoft, meanwhile, has let hints about application hosting trickle out. But the software vendor had never been so explicit about the possibility that it would host office applications itself, she said.

Microsoft already operates a major application hosting service with its 40-million-member Hotmail e-mail service.

Among the most likely corporate users to demand Office over the Web would be those who are upgrading hardware and may not want to manage the software in-house anymore, Wohl said. But there will always be a large segment of users who want to keep Office on their PCs, she said.

One such sceptic is John Weigel, technical Architect at Andersen Corp, a window and door maker in Minnesota. "When the network goes down, how many people do you have sitting around doing nothing?" he said. And with applications running over the internet, the company would be unable to pinpoint network slowdowns as it can with its local networks. In addition, Weigel said the company has too much sensitive data and content in its office documents to expose them routinely to remote sites and a public network.

However, the exposure of office applications to Web browsers could be of interest to users of platforms such as Linux, where Microsoft Office doesn't run. Wohl said because Linux will likely gain acceptance regardless of whether Microsoft offers applications that run on it, Microsoft might as well gain revenue by offering Office to users.

In yesterday's conference call, Microsoft executives added that they plan to narrow the focus of the company's myriad online ventures so they can focus on driving more traffic to Web access and content services. The company's sites are the third most heavily visited on the Web, Microsoft's Ballmer said.

"We've got a lot of good momentum, but we're not No. 1," he said.

Ballmer didn't specify how the company might narrow its focus, but he said the company's Carpoint site, which helps consumers find cars to buy, isn't central to the company's mission of providing internet access and technology to make the consumer experience on the Web richer.

Analyst Wohl said some of the company's sites would be attractive purchases and that Microsoft could decide to sell some of them.

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