Office productivity moving online, market suddenly hot

Microsoft Corp. announced Monday its Microsoft Office Live Workspace, a web based extension of Microsoft Office that that allows users to access their documents online and share their work with others including those who do not run Microsoft Office on the desktop.

The beta version of this service, which went online today, allows users to collaborate and comment on documents online, but requires Microsoft Office to run on the desktop if the document has to be edited.

Microsoft has only put a part of its Office suite online, to protect its business of selling software licenses to Office on the desktop. The company is pitching for a combination “software and service” model for the delivery of software in contrast to competitor Google Inc., which offers online office productivity software like a spreadsheet, word processor, and presentation software.

Adobe Systems Inc. is also moving towards an online model. It also announced Monday that it has signed a definitive agreement to acquire a company in Waltham, Massachusetts called Virtual Ubiquity and its online word processor,Buzzword, which was built with Adobe Flex software and runs in the Adobe Flash Player.

Microsoft’s move to help its customers access their files on the web from wherever they are, may hence be seen as a nice new feature, but not a dramatic change in business model. A lot of customers in fact favor this dual model, and there have been hints that Google too may offer a desktop version of its office productivity software.

All of a sudden, office productivity, is seeing fierce competition. It seemed like that market had been won and conceded to Microsoft with folks like OpenOffice and StarOffice putting up token resistance.

IBM Corp. launched last month Lotus Symphony, an office productivity suite based on open-source OpenOffice.org and Eclipse. The company had 100,000 downloads of the software in the first week it was offered. Analysts like Gartner Inc. say that IBM’s Symphony is just a makeover of OpenOffice which was already available for free download or through Sun Microsystems Inc. as StarOffice. Because of remaining compatibility issues, user organizations have to still run Microsoft Office once they start using OpenOffice, according to Gartner.

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IBM has 100,000 downloads of Lotus Symphony, but too early to call