CES: New Microsoft Live Workspace beta rivals Google Docs

Microsoft is testing new capabilities for Office Live Workspace, its online adjunct to Microsoft Office, that will make it a closer rival to online application suites such as Google Docs.

Microsoft will start beta testing an updated version of Live Workspace later this year that allows users to create and edit new documents online, said Justin Hutchinson, group product manager for Microsoft’s Office Client division, in an interview at the Consumer Electronics Show in Las Vegas.

That’s a significant change from the Live Workspace beta available today, which requires users to create documents using a copy of Office on their PC and then save them to the Web, where they can be shared with friends and colleagues.

Launched last March, Live Workspace marked the first tentative steps by Microsoft to put its lucrative Office franchise on the Web. More than 1.5 million people have signed up for the beta since it was released, said Michael Schultz, director of product management and marketing for Office Live Small Business.

Its capabilities today are quite limited, however. Users must create new documents in the desktop versions of Word, PowerPoint and Excel, and then save them to the Web where they are stored on Microsoft servers. Others can view the documents online, but editing them requires downloading them to a PC and opening them in Office.

That contrasts with online suites such as Google Docs and Zoho, where the entire process of creating, saving and editing documents is done from inside a browser.

But Microsoft has been testing a “technical preview” of a Live Workspace update that allows users to create new documents online, without needing to have Office on their PC. The update includes a task ribbon similar to that in Office that lets people do “light editing” from inside their browser, including formatting text and tables.

It plans to roll out the update to Live Workspace beta testers later this year, though it won’t say exactly when or how many people will be allowed to test it. Nor would it say how many are testing the technical preview that came out a few months ago, but it is likely to be a small number.

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Neither Schultz nor Hutchinson described the update as a rival to Google Docs, and Microsoft positions its online tools differently. While Google sees online applications as a way to free users from the desktop entirely, Microsoft sees them as a complement to Office in its “software plus services” model.

It will recommend using the new Live Workspace in conjunction with Office, as a way for people to share documents without having to e-mail them back and forth, and to access documents when they are away from their PC — on a mobile phone, for example. For serious, heavy editing tasks, it believes people will still need Office.

“With Workspace we’re focused on that lightweight editing,” Hutchinson said. “You can do text, formatting, and move things around, but when you get into rich graphics editing, much longer documents or writing a letter to the CEO, you’ll probably want to be on the PC.”

Nevertheless, users will not be required to have a client Office license to create documents in Live Workspace, Schultz said, and the service will continue to be free for consumers, supported by advertising.

Forrester analyst Sheri McLeish said it’s not surprising that Microsoft would add document creation and editing to Live Workspace, since Google and others have challenged it with basic, more cost-effective productivity applications.

“You have a lot of alternatives that are SaaS [Software as a Service] or lightweight versions [of Office], and [Microsoft] doesn’t have many ways they can compete with those offerings,” she said. The alternatives appeal particularly to smaller businesses, where Microsoft “is not competing very well on a cost basis,” McLeish said.