Microsoft dips toe into hosted applications

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Microsoft has inched its way into the world of hosted applications by detailing two services offering incremental upgrades and free or subscription-based tariffs. However, critics said the approach does not address threats to the software giant's core business applications.

The new web-based services are Windows Live and Office Live. Currently in beta, Windows Live provides a portal for messaging, voice calls and news feeds. It also uses Asynchronous Java and XML (Ajax) so users can customise pages and add functions. Also included is the Windows Live Mail service, an upgrade of Hotmail, and OneCare, a previously-announced security service.

Windows Live will be offered on a free, ad-sponsored basis or with a subscription tariff.

Office Live, meanwhile, offers a managed service for businesses based on the SharePoint portal with web site and business automation applications - but does not include hosted versions of productivity apps such as Word. A US beta release is scheduled for spring.

Some critics saw shortcomings. "Where are Word Live, Excel Live, Outlook Live?" asked Salesforce chief Marc Benioff. "[Startups] Writely, NumSum, Zimbra and others are stepping up where Microsoft has failed to deliver."

Paul DeGroot of analyst Directions On Microsoft argued the strategy was " thrown together... Microsoft is so desperate to get something out".

Microsoft denied suggestions that client/server software will be usurped. UK managing director Alistair Baker said on-premises software will still offer "a much richer level of opportunity".

But critics said Microsoft is trying to have its cake and eat it. "To say an online application cannot have the complexity of a traditional application is to deny reality," said Colin Smith of on-demand comms giant WebEx.

Mark Suster, founder of hosted document control firm BuildOnline, added, " Microsoft is half-heartedly going into [hosted systems] but how do you react when potentially billions of dollars could go out of your cash cow?"