The company is targeting businesses with fewer than 10 employees. Although nearly nine in 10 such businesses have Web access, only about half have their own Web site, Microsoft says.
"That's a lot of small businesses without a Web site," said Dean Nicolls, senior product manager for Microsoft's information worker services group. In one sign of the demand, Nicolls said, more than 100,000 businesses have signed up for the test. All of those companies are being included in the test of Office Live, while additional companies can sign up on Microsoft's site.
With Office Live, Microsoft is offering e-mail, Web domains, Web site hosting and other services for free during the beta. Once Office Live moves to final status around November, the most basic package of services will remain free. Microsoft will sell other packages on a subscription basis.
The company first outlined Office Live as part of its broader Live Services announcement in November. Jeff Raikes, Microsoft's business division president, said in a January interview that more than 70,000 people had signed up for Office Live and that a beta version would launch some time this quarter.
Some of the approaches and manpower for the Office Live effort stem from Microsoft's many prior small-business efforts, including bCentral. Also, Microsoft announced last month plans for "Small Business +" to offer paid online technical support to businesses.
Microsoft has grouped the Office Live services into three categories, two of which will eventually require payment, and one of which will be free. All are free during the beta period, Microsoft said.
Office Live Basics, the free entry-level service, offers small businesses their own Internet domain, 2GB of e-mail storage for up to five accounts, 30MB of storage for a Web site and up to 10GB per month of data transfer. Those who set up a site with Office Live Basics also get access to simple site analytics such as page views and which browser customers are using to visit the site. Office Live pages can be built using a variety of customizable templates, and no HTML experience is needed.
"We've tried to make it dead simple for the small business owner," Nicolls said.
Office Live Essentials offers similar services to Office Live Basics, but boosts the number of e-mail accounts from five to 50, expands the Web site disk space to 50MB, ups the data transfer bandwidth to 25GB a month and expands the Web analytics to include more information on how customers found the Web site. Office Live Essentials customers also get access to more than 20 online business applications and get toll-free telephone support as opposed to only e-mail-based help.
Microsoft is also selling just the business applications in a separate set of services it calls Office Live Collaboration. The software includes Web-based programs for managing contacts, tracking projects and completing expense reports, among . Nicolls said that most of the target customers for Office Live don't use any such software today to store their information.
"It's in filing cabinets," he said. "It's in spreadsheets."
IDC analyst Ray Boggs said that by making such services free and easy, Microsoft is removing two of the main barriers that keep small businesses off the Internet. And once they get their feet wet with a Web site, he said that businesses may find they want to do more.
Boggs said that Office Live could help Microsoft win new customers for its MSN adCenter online advertising engine.
"There is a broader competitive battlefield rather than just Web site building that Microsoft is interested in maintaining a competitive interest in," he said.
Although today Microsoft is not selling ads to Office Live customers, Nicolls said that the company does plan later this year to start pitching keyword advertising as a paid option for companies that want to draw more traffic to their site. The company plans to offer some sort of e-commerce options as well.
The only downside to the free offering, Boggs said, is that it is a bit like giving away free tickets to a concert. People are less committed than if they had their own money on the line, meaning that Microsoft could find a lot of these free Office Live Web sites neglected a few months from now.
As for the paid options, Microsoft didn't say how much it will eventually charge for Office Live Collaboration or Office Live Essentials, but said the goal is to be less than $50 per month, or under the price a small business owner might pay for cell phone service or broadband access.
None of the Web sites built using Office Live will carry advertising, though they will have a small logo noting that they are powered by Office Live. Customers of the free Office Live Basics will see advertising themselves when they log into the service to check their e-mail or edit their Web site.