However, Microsoft still walked away with a slight rise in shares, up 2.7-percent by mid-day according to Reuters. “Microsoft is finally making the conversion through the Web-based world. First, we saw that through Bing. Now we are seeing that through Office,” said Jefferies & Co analyst Katherine Egbert.

But will the web-based Office make money? The company is counting on it, hoping that consumers will follow the software to its ad-supported websites. However, the online software may hurt the sales of the retail version; the home version, Microsoft’s most popular Office title, retails for $150.

“Microsoft is in a tough spot. Their competition isn’t just undercutting them. They are giving away the competitive product,” said Sheri McLeish, an analyst with Forrester Research.

Microsoft’s free Office Web Applications are due in August.

With the incredibly large Office user-base, we suspect that Microsoft would have an instant hit on its hands with Office Online. So far, Google Docs hasn’t really become the hit that Google hoped it would be. Time will tell.

Source: http://www.tomshardware.com