Microsoft brings its Office applications online with Office 365

Microsoft is bringing its Office applications online to compete with Web-based office software like Google Apps, the company announced today at a press event in San Francisco.

The new Office is geared toward small businesses, and businesses with remote employees who telecommute. It integrates cloud services like SharePoint and Exchange with its traditional Word and PowerPoint office applications, bringing everything online with a subscription service.

“End users aren’t going to see much of a difference, they’re using the same tools they use today,” said Chris Capossela, senior vice president of the Microsoft’s Office division. “Word on the PC, phone and browser are really unchanged — they’re just connected to the Internet.”

Office 365 brings video conferencing and a public-facing website provided by Microsoft, as well as intranet software for internal collaboration. The service will come as a “basic” package for small businesses, or an a la carte pricing package for larger businesses that only need specific services. It will be a subscription-based service, unlike Google Apps, at $6 per user per month for the basic package. For larger businesses, Office 365 can cost anywhere from $2 to $27 per user per month, based on the services they purchase.

Microsoft has come under a little bit of pressure from companies like Google that are offering similar Web-based services that have become de facto collaboration tools for businesses with employees strewn across multiple locations. As companies have become more virtual and business collaboration services like Yammer have become increasingly popular, cloud services have become a necessary strategy for enterprise software providers like Microsoft.

Office 365 will launch next year, along with the traditional educational discounts for students and faculty. A beta program is launching today at noon in the U.S. and a few other countries.