By Matt Rosoff [bio]
Posted: Oct. 22, 2007

• Illustration: An Office Live Workspace

The following is the full text of an article published by Directions on Microsoft, an independent research firm focused exclusively on Microsoft strategy & technology. More samples of our content, as well as a list of upcoming articles and reports are also available.

Office Live Workspace, a free service that entered beta testing in Oct. 2007, provides an online space for users to store, edit, and share information, including Office documents and other types of files. The service, which could replace the practice of e-mailing attachments or swapping files on flash memory drives, was announced at the same time as Microsoft Online, the company's set of hosted server applications for enterprises, and is Microsoft's most direct response so far to the threat of online productivity applications cutting into Office sales.

(For more coverage of Microsoft Online, see "Hosted Messaging and Collaboration Services from Microsoft" in the Nov. 2007 Update.)

Protecting Office

Microsoft is in the midst of a major companywide effort to add online services to nearly all of its business lines—an initiative that the company has deemed "software plus services."

One impetus for this change is the threat of competition from Web-based productivity offerings that compete with Microsoft Office, such as Google Docs (which includes an online word processor, spreadsheet, and presentation application) and Adobe's Buzzword (an online word processor that Adobe acquired in Oct. 2007). While none of these products generates the revenue or has the customer base of Office, they are garnering considerable media attention and attracting interest from some users because of certain inherent advantages in online applications, such as ease of sharing and collaboration, accessibility from different types of devices from any location, and lower risk of data loss.

Despite these competitors' lack of traction, Microsoft does not want to wait until one of them begins to affect Office sales. Although Microsoft doesn't reveal Office revenues or income, the segments that contain Office—the Business segment today, and Information Worker from 2002 through 2006—have consistently boasted profit margins above 65%, suggesting that Office is second only to the Windows client in profitability. These profits help Microsoft fund newer businesses, including its online push.

Office Live Workspace, which bears a strong resemblance to the business-oriented Office Live, is Microsoft's most direct response so far to the threat of hosted consumer applications cutting into Office sales. It is not a hosted version of Office, but attempts to offer users the major benefits of a hosted productivity suite—universal access and reliability—while still relying on Office or other thick-client desktop applications for creating and editing files. In this way, Workspace is one of the best examples so far of a Microsoft "software plus services" offering.

Office Live for the Masses

The paid versions of the original Office Live service, which opened for public use in Feb. 2006, not only allow subscribers to store and collaborate on Office files but also offer many other features for small businesses, including domain name registration, Web site hosting, and online business management applications, such as calendaring and basic project management. That service, which will continue under the name of Office Live Small Business (OLSB), has garnered more than 450,000 subscribers according to Microsoft, although the majority uses the free version, which does not include document collaboration or the business management applications.

Like OLSB, Workspace is based on Windows SharePoint Services (WSS), Microsoft's server application for collaboration within organizations. However, Workspace has a narrower scope and a broader intended audience than OLSB: it lets users post information, including files and lists, to an online repository, then share this data with other users in a controlled fashion.

For small businesses and users who want to access their data from multiple locations, Workspace takes the place of procedures such as e-mail attachments and swapping files on flash memory drives, while offering many advantages of a file server: all users access the same "definitive" version of a file and can see who edited the file last, and users with editing privileges can roll back changes to a previous version. Workspace could also be used in corporate environments to give outsiders, such as partners or vendors, access to documents that they wouldn't be able to access on an internal file server.

(For a screen shot of a shared Workspace with different types of files, see "An Office Live Workspace".)

Three Modes of Access

Users can access Workspace in three ways, each of which offers different functionality.

Browser-based. Workspace is designed to be used primarily with a browser. Users can post and view files directly in a browser window and can make annotations in an adjacent pane with a built-in rich-text editor.

To edit a file, users must have the appropriate applications on their PCs. When a user attempts to open a file for editing, Workspace opens the application and makes a local copy of the file; users can then manually save the file back to the Workspace when they're done editing. As is the case with WSS, Workspace can merge changes from simultaneous users after they both close the file.

Workspace is not limited to Office files: users can post nearly any type of file, including files in Adobe's PDF format and image files. (For security reasons, executables and some other types of files cannot be posted.)

Workspace also offers a tool for creating simple data tables (lists in WSS and Office Live parlance) as well as preset templates to make it easier to build certain types of lists—for example, an events template automatically displays a calendar when the user hovers over a date field, eliminating the need to enter the date manually. Another set of templates helps users create entire Workspaces for specific purposes, such as organizing a study group for school or planning a trip.

Compatible browsers include Internet Explorer 6 or later on Windows XP, Windows Server 2003, or Windows Vista; or Firefox 2.0 or later on the same versions of Windows as well as Mac OS X 10.2 or later. Support for Safari (the default browser on the Mac) is in the works as well. Initially, some features may require users to download an ActiveX control, which would make those features unavailable on Firefox or the Mac, but Microsoft says it is creating workarounds wherever possible in an effort to offer identical functionality across browsers.

Office Live Add-In. Users with Office XP (or later versions) will be prompted to download and install an Office Live Add-In the first time they open an Office file on the service. Once installed, this add-in lets users save new Office files to a Workspace and open Workspace files from Office, all without using a browser. The add-in will also synchronize contacts, events, and tasks between Workspace and Outlook and let users export lists from Workspace to Excel.

SharedView. Multiple users can view and edit the same files simultaneously by downloading and using Microsoft's free SharedView client, also in beta. Introduced in summer 2007 and based on Microsoft's Live Meeting technology, SharedView lets multiple users share files over the Hypertext Transfer Protocol (HTTP), which allows the service to cross firewalls. SharedView already makes use of Office features: for example, when used with a Word document, SharedView automatically turns on the Track Changes feature and marks each user's revisions accordingly.

Granting Access

The user who creates a Workspace can grant read-only or read-write access to any item or to the entire Workspace by filling out a field that looks like to a "To:" line in an e-mail program. Access control is handled via Windows Live ID (formerly Passport), and the service automatically fills in any e-mail address in the creator's Windows Live Contacts database (which is compiled from Hotmail and Messenger contacts).

Users can also grant anonymous read-only access to any individual with an e-mail address; the user receives an e-mail with a link that lets her open the particular item.

Availability and Resources

Workspace is launching an invitation-only beta in late Oct. 2007 and will be broadly available by the end of 2008. Microsoft will also incorporate Workspace into its Live@edu suite of services for universities, which currently includes hosted e-mail services based on Hotmail.

Initially, Workspace will offer 500MB of storage, which Microsoft says is enough for 2,000 to 3,000 typical Office documents, but this is not a hard limit, and the company is likely to increase storage size as customer needs grow—for example, Microsoft has increased space limits on its consumer-oriented Hotmail e-mail service and Live Drive online storage services on a fairly regular schedule.

Workspace will not contain advertisements during beta testing, but Microsoft says that Workspace was designed to display advertisements and will contain them in the future.

The Office Live Workspace site, including more information and a link to apply for an invitation to the beta, is at office.microsoft.com/en-us/officelive/FX102394081033.aspx.

SharedView is covered in "SharedView Expands Collaboration Portfolio" on page 26 of the July 2007 Update.

The original Office Live (now called Office Live Small Business) was covered in "Office Live Offers Simple Collaboration, Applications" on page 17 of the Jan. 2007 Update.