Microsoft Corp. said on February 13 that it is set to begin testing an online version of its popular Office software in a first step towards shifting some of its computer-based products to the Web to fend off rivals such as Google Inc. and Yahoo Inc.

Starting on February 15, the world largest software maker plans to offer a "beta" or general test version of Microsoft Office Live for free to help work out any potential problems prior to a full-fledged commercial release later this year.

Microsoft dominates the market for software installed on a computer's hard drive with its Windows operating system and its Office business application franchise, which packages together word processing, spreadsheet, presentation and other programs.

But a host of competitors are challenging the company with services and software that receive automatic information updates via the Internet.

Protecting its turf versus smaller, more nimble rivals such as Google, Yahoo, Salesforce.com, and WebEx Communications Inc., the new product is at the heart of a push by Microsoft to show investors it can rejuvenate its static share price.

Office Live offers small businesses the ability to create and manage Web sites and maintain corporate e-mail accounts while working with the desktop versions of Microsoft Office such as Excel spreadsheets, Word documents and Outlook e-mail.

"We are making online services available for small businesses to create (big business-like computing) for them without the management requirements," said Jeff Raikes, president of the Microsoft Business division, in a statement.

Office Live will be available in three tiers of service.

The basic version, supported by online advertising, will be free and offer up to five e-mail accounts with 2 gigabytes of storage using the company domain name along with standard Web design and management tools.

The other versions of Office Live are subscription-based. Microsoft Office Live Collaboration offers online project management tools based on Windows SharePoint Services technology for companies that may already have a Web site.

The third tier, Microsoft Office Live Essentials, provides up to 50 e-mail accounts, more advanced Web design features and management tools and a package of Internet-based applications to help manage customers, projects and documents.

All three versions are free during the testing period, but the two subscription services will start from $29 per month, said Baris Cetinok, director of product management and marketing for Microsoft Office Live.

"We looked at the segment for Office Live and not only was there a great growth opportunity, there was a great unmet need," Cetinok said in an interview.

The Office Live preview will become available to more than 100,000 people who have already registered to be part of the latest test run from 1400 GMT on February 15.

Shares of Microsoft closed down 30 cents at $26.39 on the Nasdaq. Since the start of 2002, they have lagged every major U.S. share index.

(www.financialexpress.com)