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Microsoft's cloud-based Office 2013 won't hit GA with Windows 8

This isn't your father's Office suite; Microsoft Office 2013 includes social collaboration and cloud integration features, but it may not be available this year.

Microsoft Office 2013 differs from previous versions in how it is delivered to Windows devices and the ways in which it can be used. All of the cloud-era advancements may not be enough to stave off competition, however, particularly if Microsoft delivers Office late.

The new Office suite includes a simpler user interface, more features and touch support for Windows 8, but the biggest changes are the roles that social collaboration and cloud computing will play in Office 2013 (previously referred to as Office 15).

Microsoft views its cloud storage and file syncing application, SkyDrive, as "absolutely fundamental" to Office 2013. With Office 2013, documents and settings can be stored in the cloud, and apps are streamed to Windows 7 and 8 desktops.

"Things aren't much different overall, but the SkyDrive integration is a fantastic feature," said Jeff Naperski, a network administrator at United One Resources, a real estate research company in Scranton, Pa.

With email, documents and other Office-related data centralized in a cloud-based Office product, employees can perform "just about all" of their work duties without having to log into the corporate virtual private network, Naperski said.

Office 2013 is the first step toward "Office as a Service," said Microsoft CEO Steve Ballmer during a product announcement event this week. Part of that transition includes placing the cloud-based version of Office, Office 365, front and center as Microsoft’s marquee productivity application for 2013.

During the announcement event, the company barely mentioned the availability of a locally installed copy of Office, which will still be available, albeit in a "light" version.

Microsoft Office 2013 and Windows 8: A winning combination?

Meanwhile, Microsoft faces competition from both Google Apps and third-party Office applications for Apple devices. It remains to be seen whether Windows 8 and the new cloud-based Office is a winning combination.

"While there is a better version of Office here, to help make the most of Windows 8, these two are now fighting as a team to help fend off the iPad," said Wes Miller, an analyst at Directions on Microsoft, an independent research firm in Kirkland, Wash.

Office has more than a 90% market share for "business productivity software" and more than an 80% share of corporate email, according to research firm Gartner Inc.

More on Microsoft Office 2013

Office 2013 includes deeper integration between applications such as Lync and Skype for voice collaboration, which can be initiated from within Outlook. Users can also connect contacts to profiles across social networks such as Facebook, Yammer and LinkedIn.

There is a panoply of granular changes, including better extension support to enhance functionality of Office applications, the ability to edit PDFs in Word, and the ability to embed and play videos from YouTube. Office 2013 also includes an Excel feature called "Flash Fill" to reformat and rearrange data automatically, and Excel will auto-complete remaining data with no formulas or macros.

Yet, in recent years, Google has begun to affect Office's bottom line. Gartner estimates that anywhere from one-third to a half of new corporate users will eventually move away from Microsoft's flagship software to Google or other Software as a Service (SaaS) apps.

Microsoft's release timing for Office 2013 may play an important role in the competitive game.

The software vendor expects to deliver Windows 8 and its Surface tablets in October -- the same month that Apple is expected to deliver its iPhone 5.0. The company was going to make Office 2013 available only on Microsoft hardware in the fall and not make versions for Apple's iPad and iPhones available until early next year, thereby giving Microsoft's products a competitive leg up.

But Microsoft did not offer a release date for the upcoming versions of Office, and sources briefed by Microsoft said they would likely not be available until early 2013, if Office 2013 enters the release to manufacture stage in the fall.

If the versions of Office 2013 for Microsoft's hardware slips to the first quarter, and if Microsoft remains committed to not delivering Apple versions for several months after it delivers the Microsoft optimized versions, it could be well into next year before Office 2013 appears on Apple's market-leading mobile devices.

This could be a critical error if corporate IT pros decide they don't need to upgrade to Office 2013 and gravitate to competitive offerings such as Google enterprise apps, or if they realize that acceptable alternatives are available on their Apple devices, industry watchers said.

Many users already use Microsoft, Google and Apple products together.

"[I'm] enjoying the irony of trialing Office 365 Home Premium on my MacBook using Google Chrome," said Charlene Li, founder of the Altimeter Group, a research firm in San Mateo, Calif.

Microsoft will charge users $10 to $22 per month for the various versions of Office 365, according to sources familiar with Microsoft’s plans. That could change based on the market at launch time.

Subscriptions to the cloud-based Office 365 will include automatic feature updates at no additional charge as they are made available, which has become the standard for SaaS apps.

Currently, small companies can license a lightweight version of Office 365 for as little as $48 a year per user, which is competitive with the $50 per-user, per-year price of Google enterprise apps. That could change, however, because Office 365 will become the full-featured version of Office.

In addition, Office will be bundled on ARM-based tablets running Windows RT and Windows Phone devices, though only Word, Excel, PowerPoint and OneNote will be included. Finally, enterprises can purchase a server-specific version with Exchange, SharePoint, Project and Lync, with the choice of licensing cloud hosting, local servers or a combination of the two.

Pricing for the locally installed copy of the application was not disclosed.

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