Microsoft is jumping on the software-as-a-service bandwagon by launching its SaaS version of Microsoft Office, code-named “Albany”, in private testing mode today. Albany will give users a new way to get the latest versions of Microsoft Word, Excel, PowerPoint and other products — they can pay a subscription fee, rather than purchase a new product at the store.

I know, I know, it’s hardly a revolutionary business model. But it’s a new move for Microsoft, which is really the poster boy for the traditional software distribution that SaaS companies are trying to uproot. And the decision makes sense: As we’ve said before, Microsoft needs to get online and into the internet cloud soon if it wants to stay relevant. The subscription model also helps Microsoft receive a steady stream of revenue, rather than waiting for users to feel motivated enough to buy the latest version of Office.

On the other hand, it’s not clear that we’re going to see a huge surge in adoption. (Product Manager Bryson Gordon says Albany will launch publicly by the end of the year, according to All About Microsoft). It doesn’t seem to offer any unique features that aren’t already available to a Microsoft Office owner with a Windows Live account, but it will tempt people who have been thinking about using Windows Live and Office Live, yet haven’t made the leap. By including Office Live’s collaborative features, Albany could be a serious competitor to Google Docs — the Docs I’ve used tend to be “just good enough” versions of Microsoft software — as long as the price is right. Microsoft Word may have more features than Google Docs, but none of them are crucial enough that I’m willing to pay top dollar for them.

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