January 03, 2011, 8:46 PM — Microsoft Office 365, a suite of business-focused, cloud-based applications that was recently released in beta, is actually a repackaging and updating of various Microsoft offerings -- optimized for the cloud. The intent is to give small businesses the kind of benefits that up until now only large companies have been able to get from services such as Exchange and SharePoint.
Don't be confused by the product's name -- it's not a new or updated version of Microsoft Office. Office 365 is an upgrade of Microsoft's Business Productivity Online Standard Suite (BPOS). This revamped and renamed version of the suite adds subscription-based access to Office 2010 to BPOS and includes hosted versions of Exchange, SharePoint and Lync (Microsoft's communications server), along with Office Web Apps, the Web-based version of Microsoft Office.
Some versions of Office 365 do include a subscription-based version of Microsoft Office Professional, and there are some links between Office 365 and Microsoft Office: You can use your local version of Microsoft Office to pull down and edit documents from the cloud, or use Office Web Apps to create and edit documents.
Apart from that, though, there are no connections, and you don't need Microsoft Office in order to use Office 365. It's one more example of confusing branding and naming from Microsoft.
From what I've seen in the beta, Office 365 offers an excellent set of tools for companies that want the power of Exchange, SharePoint and Lync but don't want to host them. It will be especially welcomed by small and midsize businesses that can't afford data centers and sizable IT staffs.
But the product, at least in its current form, has enough rough edges that it feels more like a series of applications bolted together than a well-thought-out, integrated whole.
Pricing for Office 365 is tiered. Small businesses with up to 25 users pay $6 per user per month, which doesn't include Microsoft Office. (The suite works with already-installed versions of Office.) For larger enterprise customers, there's a wide range of pricing. For example, existing BPOS customers pay $10 per user per month (the same price they pay today), while enterprises that want a subscription-based version of Microsoft Office Professional Plus for their users, in addition to the rest of the suite, pay $24 per user per month.
Exchange and Outlook in the cloud