Microsoft announced at the Professional Developers Conference Tuesday that it is finally, but not killing the traditional versions. It's about time Microsoft got with the program here. Online apps offer several advantages over software apps, which in its Google Docs suite. Primarily, documents that are created in an online app can be opened up for sharing and collaboration very simply.
If Microsoft Office were not a nearly ubiquitous piece of software, chances are the company would have added an online version earlier, due to another bit benefit of the platform: Your user base grows virally. All it takes is for a user to share a document and the app comes along with it, for free. With paid and installed software, obviously, there's a big barrier to adoption.
All is not peaches and cream with online apps, though. As a rule, they have less robust feature sets and interfaces than installable apps. Although many see that as a benefit, it's an easy thing to market against. People new to a word processor may adopt and stick with a product like Google Docs, but anyone with a few years of usage history in Office is going to find it harder to make the move.
Even among online suite users, there is often a split in usage behavior: People will use an app like Word to compose most or some of their documents, and then import them into Google Docs if they need to share them. Or they'll use Google Docs for some types of composing (documents destined for the Web) but not others (mail merge letters or documents being created for print). And this is where Microsoft has the upper hand. If (big if) the company manages to build online versions of its Office apps that complement its installed apps, it can obviate the problems with the split-use model, gracefully letting users float between versions of the apps as they want or need. In a demo at the PDC, Microsoft showed, among other things, two users working on a single OneNote 14 notebook. One was on a desktop app, the other on a browser. The changes on one were syncing over to the other. This is how apps should work: users should not care if they are online or off.
Microsoft, though, does not have a track record of building strong online/offline apps. The Web version of Outlook, Outlook Web Access, is a pale and poor cousin of the desktop app. And Microsoft has already said that the new online apps will not have all the features of the desktop apps.
As far as pricing, Microsoft will be competing with Google's free Google Docs as well as Zoho's suite. Microsoft cannot afford to give away its core productivity app completely. The company has not revealed its entire pricing strategy, although representatives note that the current has both free, ad-supported options as well as subscription services.
Although Microsoft will be late to the game in offering an online app suite when Office Online beta shows up in 2009, I do not believe it is too late. Google and Zoho have softened up the market for online apps but there are still plenty of people locked into Microsoft Office. This new direction brings Microsoft into an emerging market, which will then see a very big uptick in competition. This is going to be very cool to watch, and beneficial for users.