Microsoft Office, the backbone of many a small business, is getting an Internet makeover.

Starting with the next upgrade, Office, the popular office productivity suite including Outlook, Excel, PowerPoint, and OneNote will be available as individual Web-based applications that can be accessed using several types of browsers and just about any kind of computing devices that can log onto the Internet.

The upgrade is called Office Web Applications. Microsoft unveiled it at a developers’ conference in October and was expected to begin offering limited private technology previews before the end of 2008 before a beta release sometime in 2009. The company has not disclosed when the programs will be widely available.

The apps will be “lite” versions of standard Office programs that will be heavy on the features people want when they’re working on the Internet, such as the ability to share documents, says Chris Bryant, Microsoft’s Office group product manager.

The apps will let people create, edit and collaborate on documents through the browser. Apps will work with Internet Explorer, Firefox, and Safari browsers. Microsoft is still testing the programs’ ability to work with Chrome, the new browser from Google, Bryant says.

Good news for small business

The changes come as Microsoft makes more of its business software available on the Internet, or “in the cloud” as it’s coming to be called. It’s about time, says Scott Kozicki, a contract CIO and long-time IT professional who lives in Nashville, Tenn. “Our lives have been completely transformed” by the Internet, Kozicki says. “Whether it’s cell phones, digital video recorders, or laptops, it’s everywhere. A lot of the thinking about storing data on a machine is rooted in the 70s version of the PC and we’re so far beyond that. I think this is Microsoft waking up to that concept.”

When it comes to Web-based apps, Microsoft is following competitors like Google, which acquired or created its own office productivity programs like Gmail

and Google Docs as Web apps from the get go and has gained a wide following as a result.

But Microsoft still owns the bulk of the office productivity software market. By the company’s own reckoning, between 500 million and 600 million people worldwide use Office, making it the most popular office productivity tool anywhere. According to a September poll by ReadWriteWeb, the technology news blog, 49 percent of 2,600 respondents use Microsoft Word as their main writing program compared with 16 percent who use OpenOffice, an open source word processing program, and 15 percent who use Google Docs.

Playing catch up with Google

Although Google has a head start in the Web apps department, the programs leave enough to be desired that Microsoft can catch up, says Ralph Barbagallo, a Valencia, Calif., game designer and Microsoft software user. “If Microsoft can release a good Web version of Office while it’s still the gold standard they have a shot,” Bargagallo says. “Of course, finding a way to make money from them is the challenge.”

Microsoft’s move to Web apps is significant for small businesses, especially companies that are too small to maintain much of an IT staff, says Bryant, the Office group product manager. “Microsoft’s software plus services strategy can help those people who are self-managing their IT because it’s partly off loading some of that burden to us,” he said. Web apps can also help small businesses by putting them on the same technological footing as bigger business partners. “You don’t necessarily have to know what version the person on the other end of the line is using” to collaborate, he says.

According to Bryant, the Office group product manager, business customers will buy Office Web apps through the same type of licensing agreements they use to purchase other Microsoft software. Individual consumers and solo entrepreneurs will be able to choose from some advertising-sponsored free apps and some subscription-based services, both of which will be offered through Microsoft’s Office Live portal.

Businesses that want to participate in the Office Web private technology preview can sign up at the Office Live Workspace.