Microsoft Office Lurches Online

The Web-based Office Live is a start, but there are some disappointments

Thanks to Google (GOOG) and startups such as Zoho, there are free, Web-based programs that can sub for Microsoft Word, Excel, and other elements of Microsoft Office. While these freebies have yet to make a dent in the sales of Office, Microsoft (MSFT) is jumping on the Web-centric approach. Its suite of services for small businesses, Office Live, is a useful if slightly awkward first step. If history is any guide, Microsoft will gradually come up with better and more comprehensive Web offerings.

The Office Live name is an unfortunate choice, since its pieces have little to do with Office and are certainly not Web-based versions of Word, Excel, or PowerPoint. Furthermore, Microsoft tends to stick the name "Live" on any Web-based product, so the same brand is also used for a range of consumer services, including instant messaging and social networking.

As with many rival Web offerings, the core services that make up Office Live Small Business are something of a hodgepodge. The elements are of uneven quality, and they're not as well integrated as they should be. The biggest weakness is a confusing design that makes it hard to move from one activity to another.

And while Microsoft doesn't charge for basic services, it hopes to generate revenues by selling add-on services. Office Live is free for up to five users, but going to 10 costs $14.95 a month. Privately branded e-mail and extra storage also cost money.

Easy to Sell Your Wares

Any small business that hasn't already ventured onto the Net will appreciate Page Manager. It's a Web page design service that helps you set up a site and edit the content you place there. Microsoft will even register a domain name for your business free of charge for the first year ($14.95 a year thereafter). Page Manager is straightforward and requires no technical knowledge, though I found it less intuitive and less flexible than a similar service offered by Intuit's (INTU) Homestead, which starts at $5 a month. I do applaud Microsoft for making its Web services "agnostic" with regard to the browser: Internet Explorer and Firefox both work with Office Live, in Windows or on the Mac (AAPL).

Office Live also makes it fairly easy for small businesses to sell their goods online either through their own stores or on eBay (EBAY). But this isn't a giveaway. The Store Manager service costs $29.95 per month for the first six months and $39.95 a month thereafter, plus 1% of the value of goods sold.

While most of the services in Office Live Small Business aim to help companies interact with their customers online, some focus on helping employees work together. Confusingly, there are two different services for sharing documents and other information. The first, Team Workspace, provides for a shared calendar and collaboration on documents and project management. The second, Office Live Workspaces, despite the similar name, is a separate service that targets individuals and informal groups within big companies. It's a free, Web-based version of Microsoft's Sharepoint corporate collaboration service, and it works pretty well.

But Microsoft made some jarring missteps. It decided not to include a folder system that would help employees organize documents they upload and share in the Workspaces. And while it's simple to upload multiple files from your computer, you can't upload an entire folder at once.

No Easy Integration

The main thing that bothers me about Office Live is, oddly enough, its lack of integration with Microsoft Office. For example, it's simple to view, create, or change Office Live contact or calendar entries in Microsoft Outlook. But transferring your existing Outlook contact list and calendar to Office Live is a complicated and tedious chore.

Microsoft's entry into the online business-services market is overdue and welcome. But it feels a bit half-hearted, and it's going to take more than this to beat the increasingly aggressive competition.

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