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Microsoft ratchets up its software-plus-services initiative with Office Live Workspace while AT&T buys Internet conferencing company Interwise.

Major technology vendors are continuing to push initiatives to bring collaboration tools online, fueled by equal parts customer demand and competition from rivals.

Moves by Microsoft and AT&T illustrate efforts by established tech companies to carve out space in the market contested by major vendors such as IBM and relative newcomers such as Google.

Microsoft, of Redmond, Wash., is ratcheting up its software-plus-services strategy with an offering known as Office Live Workspace that is due later this year and will let customers access, share and collaborate on documents online. But there is a catch: Users will not be able to edit the documents they are viewing through a browser unless they have Office installed on their computer.

"You need Microsoft Office to edit Office documents, but if you do not have it installed you can view Office documents in a browser [both Internet Explorer and Firefox will be supported] and can comment on them," a Microsoft spokesperson told eWeek Sept. 30.

For users who do have Office on their machine, when they click to edit a document, it will be downloaded into the version of Office they have on the desktop—Office 2003 and Office 2007 are supported. When changes are made and the document is saved, the changes are automatically saved to the online version of the document, the spokesperson said.

The service will be available at no charge when released later this year, and the software maker is accepting registrations from customers who want to help test the beta. While Office Live Workspace initially will not include advertising, the plan is to do so at a later stage. The company is also testing different designs and may also offer additional features or services for a price at some point, the spokesperson said.

The Office Live Workspace offering is yet another indication of how seriously Microsoft is taking the growing competition in the productivity space as well as the threats posed to its traditional business model by online competitors such as Google, with its Documents and Spreadsheets offerings. IBM has also announced Lotus Symphony, a suite of free software tools for creating and sharing documents, spreadsheets and presentations.

Microsoft is initially offering three online services—Exchange Online, Office SharePoint Online and Office Communications Online—to enterprises with 5,000 or more seats.

"This new era of connected computing is about empowering people and businesses to balance the power of the Internet with the rich interactivity and high performance of client and server software," said Jeff Raikes, president of the Microsoft Business Division. "With todays announcements, we are taking a significant step forward by combining our deep client and server software experience with our strong commitment to delivering flexible services offerings for our wide variety of customers and their unique needs."

When asked if Office Live Workspace was a response to the growing threats in the online productivity space, the Microsoft spokesperson said that it was "created to enable Office users to access their information anywhere and share their work with others, whether at home, work and school."

The existing Office Live offering will be rebranded Office Live Small Business, a change announced by Microsoft CEO Steve Ballmer at the companys Worldwide Partner Conference in July.

Microsoft is also now differentiating between the "Live" services targeted at individuals, business users and virtual workgroups and the "online" services that live in its data centers and that are geared toward large organizations with more advanced IT needs.

The online offerings from Microsoft are one of the three ways customers can get their software; the others are by buying and hosting the software themselves on-premises or through the hosted services available from Microsofts partners.

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