Microsoft is heaving its two-decade old set of applications into an online format so that customers can use them on a variety of devices from wherever they can get an Internet connection.
It wants to fight back against Google Inc, which has stolen a small but worrying percentage of its corporate customers with cheaper, web-only alternatives, which remove the need for companies to spend time on installing software or managing servers.
"It’s obvious that Microsoft has to do this if they’re going to remain competitive with Google," said Michael Yoshikami, chief executive of money manager YCMNET Advisors. "It’s something they have to do."
Microsoft shares rose 3.7 percent on Monday, the largest gain in a single trading day since September. Microsoft has offered online versions of some Office programs for its corporate customers for several years, and last year rolled out free versions for individual home users.
Chief Executive Steve Ballmer is plan to present an overhauled and updated set of offerings — collectively called Office 365 — at an event in New York City on Tuesday morning, underlining the company’s newfound online focus.
The market for web-based software services is heating up. It’s a new challenge for Microsoft, which built itself up on expensive versions of software installed on individual computers. That business model turned the Office unit into Microsoft’s most profitable, earning more than $3 billion alone last quarter.
Last October, when it rolled out a test version of the new service, Microsoft said it planned to charge from $2 per user per month for basic email services to $27 per user per month for advanced offerings. Google charges a flat fee of $50 per user per year for its web-based Google Apps product, which offers email, calendars, word processing and more online.
The full launch of Office 365 will spice up the lively competition with Google for new users.
Earlier this month, Google snagged InterContinental Hotels Group as a major customer, moving 25,000 of its employees onto Google email from Outlook.