Microsoft Discusses Upcoming SaaS Plans

Microsoft Corp will soon launch a full range of online versions of its software products, including the Office suite, and expects the weak economy to accelerate growth of the nascent Web-based software market, a senior executive said on Monday.

Stephen Elop, president of Microsoft’s business division, is leading the company’s entry into the “software as a service” market, which offers programs that are hosted online instead of downloaded to computer hard drives.

By using the Web to host software like Microsoft Office, as well as Exchange e-mail and SharePoint collaborative software, Microsoft (NASDAQ: MSFT) customers do not need to spend as much money on equipment and maintenance of computer servers.

“What we think is in five years, 50 percent of the use of Exchange and Sharepoint could be serviced from the cloud,” Elop told Reuters in an interview.

“Between now and then, a year or two or whatever, if it’s going to be tough economic times, that means we expect quite a lot of movement in that direction, a lot of people taking advantage of that,” he added. “I think the economy will help it.”

Microsoft’s foray into online software services comes amid competition from Google Inc, whose Google Apps provide free Web services including calendar, collaboration, email and messaging software.

Redmond, Washington-based Microsoft has said it plans to upgrade its Office business software to include online versions of the popular Word and Excel programs. Elop said the company would soon announce a wide range of services, including free versions supported by advertising.

“We expect fully that the full range of Office utilities, from the most advanced to simpler lightweight versions, will be available with a range of options: ad-funded, subscriptions-based, traditional licensing fees, and so forth. So you should expect to see that full array,” he said.

Elop declined to specify when the services would be launched, but said “in 2009 you’re going to see a lot of advance in this area.”

Microsoft will likely make a profit from the new initiative within a year after the launch, he said.

He also said that even the basic, free versions will trump Google Apps in capabilities, and that Microsoft will ensure that users can move Office documents in and out of the Web browser environment without any garbling to the text.

Microsoft’s advantage against Google is its rich set of software services, he said, adding that this is also a benefit as it competes with network equipment maker Cisco Systems Inc, which is also expanding into the Web-based software business.

Elop said recent meetings with customers showed strong interest in upgrading to online software applications, despite worries that a global recession would dampen technology spending.

“We may have underestimated the extent to which customers will move in this direction,” he said.

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