What's Microsoft's Office Web Apps strategy?

What's Microsoft's Office Web Apps strategy?

Microsoft's addition of real-time collaboration to its free Office Web Apps last week was necessary in the short term to counter Google Docs, analysts agreed.

But the company's longer-term strategy for the browser-based Word, Excel and PowerPoint apps remains less clear.

"Real-time collaboration is what got Docs on the map. And Office didn't have it," said Michael Silver of Gartner in an interview Friday.

Wes Miller, of Directions on Microsoft, agreed. "It's really important that they added [real-time collaboration] for those who were looking right-left, right-left at comparisons between Office and Google Docs," said Miller. "This was a counterpoint to Docs."

Last Thursday, Microsoft began rolling out enhancements to the browser-based apps, notably real-time collaborative document editing. Previously, users could simultaneously edit documents but needed to save the changes before others could see them.

Office Web Apps can be used free-of-charge, but they are also included with Office 365, the software-by-subscription service that Microsoft has been aggressively promoting and selling to businesses. There, Office Web Apps are linked to SharePoint, the Redmond, Wash. company's collaboration platform and central hub for storing, accessing and sharing documents.

But Microsoft's overall strategy with Office Web Apps has always been something of a mystery.

Clearly, one reason for their existence has been to defend against customer defections to Google Apps for Business, the $50 per user per year service that includes Docs. Microsoft currently counters Google Apps for Business with a pair of Office 365 plans built around Office Web Apps: One, aimed at small businesses with 25 or fewer employees, is priced at $5 per user per month ($60 annually); the second, targeting larger firms, runs $8 per user per month ($96 a year).

Beyond that, however, its purpose has been debatable. Is it an eventual substitute for Office on the desktop? A loss-leader aimed at consumers? The cross-platform Office for tablets running Android or iOS?

At the center of that debate is the central dilemma of Office Web Apps: Microsoft must walk a line between not offering enough functionality and offering too much. The former would negate its ability to compete with Google, the latter could prompt businesses to dump the higher-priced Office perpetual licenses or Office 365 plans that include rights to the desktop suite.

Rivals don't have to join that high-wire act, since their business models don't rely on software sales, but on advertising (Google) or devices (Apple).

In the past, Microsoft has done little to promote Office Web Apps. Anecdotally, many consumers and businesses, for instance, don't even know they exist. That hints Microsoft has been more afraid of the second pitfall -- putting too much in the apps -- than in failing at matching Google.

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