Will Online Office Apps Help or Hurt Microsoft?

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Microsoft’s chairman Bill Gates officially retired in June, but his technology torch has been taken up by his hand-picked successor, chief software architect, Ray Ozzie.

Nowhere since Gates’ retirement has that been as clear as during Ozzie’s dual keynotes during this week’s annual Microsoft developer confab in Los Angeles.

Less than a year after he joined Microsoft in 2005, Ozzie wrote a famous memo defining his (and Gates’) vision for how the company needed to fight to stay relevant in a world that was rapidly moving to the Web, even as Microsoft was limping along, trying to make that transition.

Witness Microsoft’s (NASDAQ: MSFT) announcement Tuesday that it will provide stripped-down versions of its flagship productivity applications suite to users over the Internet in an offering it has dubbed Office Web.

That’s a move that seemed to be against the odds three years ago, given that Office is one of Microsoft’s cash cows. Now, it’s about to become reality.

Microsoft officials had been saying that they would present a cohesive vision of its cloud computing plans for some time.

Now, it has begun showing off key pieces of that vision, with the demonstration of Office Web at this week’s Professional Developers Conference 2008 in Los Angeles.

“Office Web is much better than I expected it to be,” Rob Enderle, principal analyst at the Enderle Group, told InternetNews.com.

The temptation for a company in Microsoft’s position might seem to be to release versions of the commercial apps that are so stripped down as to be virtually useless for serious work.

“The Web offering doesn’t seem crippled [but] instead it’s limited. It doesn’t have all the bells and whistles, but a lot of the things that you can’t do not a lot of us do anyway,” Enderle added.

That doesn’t mean that the client PC-based commercial Office suite will go away any time soon. However, the announcement of Office Web is an acknowledgment that the company not only recognizes the importance of moving to Web-based applications, but also that hard core competitors are beginning to invade its once-unassailable productivity territory.

Part of Ozzie’s mindset is that to retain customers, even as sales of the Office suite decline in the future, it needs to continue to ensure that its user interface is the one that everyone knows. Partly, this has to do with maintaining consistency between the retail and online products.

“The same kinds of people who are going for Google Apps will be satisfied with this because nobody likes to retrain,” Enderle said.

This article was first published on InternetNews.com. To read the full article, click here.