Late to the Game: Microsoft Office Online

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Microsoft plans to offer free Web versions of Word (shown here), Excel and other programs by 2010

If you're one of the two million or so people who use the free, Web-based word processor or other apps from Google or Zoho, it may seem odd to you that Microsoft is still charging $500 for the full version of its desktop Office suite — and that hundreds of millions of people still pay for it. In fact, last year Microsoft brought in about $19 billion, or just under a third of its total revenue, from the business unit that sells Office. And increased sales of Office, in particular, are credited with helping the Redmond, Wash.-based firm beat analyst estimates for first-quarter earnings on Oct. 24.

Goldman Sachs analyst Susan Friar recently called Microsoft a "laggard" in moving to browser-based software. But, in reality, it's not even a player. Although Microsoft announced on Oct. 27 that it will roll out "lightweight" Web versions of Word, Excel, PowerPoint and OneNote as part of its next release of Office, that release isn't expected until 2010. Meanwhile, Zoho, which is based in Pleasanton, Calif. and has 500 employees, has been offering its free, Web-based word processor, Zoho Writer, since 2005. Google Docs, which is ad-supported, has been around since 2006.

"I think it's about time the Office suite is free," says Zoho's tech evangelist Raju Vegesna. "We paid $500 for an Office suite when the price of the hardware was $5,000. Now the price of the hardware has come down to $500, and it doesn't really make any sense for a piece of software to cost $500."

The main reason most people still use Microsoft Office, even though they don't really need it, is because it's all they know. Rather than risk the potential frustration of figuring out a new application, both companies and individuals continue to shell out for a bunch of familiar programs that, frankly, most of us barely scratch the surface of. (When was the last time, for example, you inserted a formula or recorded a macro in Word)?

To its credit, Microsoft has done a swell job of keeping us hooked with offers like a free 60-day trial and discounted versions of Office that sell for as low as $80 online. For most users, however, free Web apps are really all you need.

And they're getting better all the time. Zoho has spreadsheet, word-processing, presentation and organizing programs, and lets you work both online and off; it even has an iPhone app. Google Docs, which focuses on collaboration, lets you upload and edit existing Word and PowerPoint files, then chat in real time as you work on presentations and reports with colleagues. Because the applications reside on the Web, developers can quickly eliminate bugs and add bells and whistles, like the ability to insert headers, footers and pagination (all of which were recently added to Zoho Writer). The programs still feel simple to use, so you'll never feel overwhelmed, and you can edit worry-free, since auto-saving features ensure that you won't lose any work you haven't saved.

So here's what I suggest. Before you pay even the lowest price for Microsoft Office, give Zoho or Google Docs a try. They aren't confusing, and they won't make you feel stupid. To make absolutely sure, I became my own guinea pig. I typed this story in Zoho Writer, even though I had never even tried it until this week. So far, so good. Here's hoping my editor feels the same.