Microsoft to launch free web-based Office suite

Microsoft will launch a free, web-based version of its Office suite in its answer to competitors such as Google Docs.

Office Web Applications will contain slightly stripped-down web browser versions of Word, PowerPoint, Excel and OneNote, Microsoft said.

The software will be accessible through mobile phones, but a separate product, Office Mobile 2010, will be required for full functionality.

The browser version will be made available through Windows Live, while Office 2010 will also be available via software licenses as part of a hosted offering through Microsoft Online Services.

“Office 2010 was designed to deliver the best productivity experience across the PC, mobile phone, and browser,” Microsoft business division president Stephen Elop said when announcing the product on Monday. “Documents will look the same all the way down to the formatting as you move across [platforms].”

Office 2010 has also been improved to allow easier incorporation of multimedia files into documents, Microsoft said. The product will launch in the first quarter of next year.

Office accounted for the bulk of Microsoft Business's $19 billion revenue in 2008. But while Office was once the undisputed king of the word processing market, new competitors such as OpenOffice and the web-based Google Docs are threatening to undermine this dominance.

These free applications haven't made much of a splash so far – in November, Google Docs only held 1% of the US market, and OpenOffice just 5%, according to a survey from ClickStream.

But Google continues to evolve the suite, and is also biting at Microsoft's heels in other areas – the company announced this month that it would soon launch an OS based on its Chrome web browser.

And with six in 10 companies planning to skip the upgrade to Windows 7 – mainly for financial reasons – that leaves a lot of potential customers for the free alternative.