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Office 365 has been in limited beta testing since October and widespread testing since April. Of the more than 200,000 businesses and organizations that have tried it out, 70 percent were small and mid-size companies, according to Ballmer, leading to the CEO's emphasis on SMBs during the press event.
"To compete, small and medium-size businesses need an edge that doesn't require a huge, up-front capital investment or complex IT systems to manage and maintain," Ballmer said. "Starting today, Microsoft Office 365 will deliver on those promises."
But Microsoft faces challenges with Office 365, including proving its reliability and security. It's BPOS predecessor has suffered a number of services outages, including one outage just last week, raising questions about how much customers can depend on cloud applications.
Ballmer sought to overcome lingering security concerns about cloud computing. "Our service level agreement policies with Office 365 are absolutely the best in the industry," he said.
The launch of Office 365 brings Microsoft into more direct competition with Google and other suppliers of personal productivity cloud applications. In a pre-emptive attack Monday Google released a list of reasons businesses should avoid Office 365 in favor of Google Apps.
Office 365 bundles Microsoft Office (including Word, Excel, PowerPoint, Outlook and OneNote) with SharePoint Online, Exchange Online and Lync Online.
Microsoft is offering a range of service plans for Office 365 with prices ranging from $2 to $27 per user, per month. As disclosed earlier Microsoft is pricing Office 365 for small businesses at $6 per user, per month. Office 365 for enterprises will have a broad range of options at different price points.
Office 365 will replace BPOS, Betz said, with customers transitioning to the new service during the next 12 months. Current users of Live@edu and Office Live Small Business will also be moved to Office 365.