Janice Kapner, head of communications for Microsoft's "information worker" group, which produces the Microsoft Office products, said the company decided to unveil its plans -- which have been an ongoing topic of speculation -- to be part of the broader cloud computing and online services announcements that have headlined the company's Professional Developers Conference here this week.

"We're here sharing at PDC so that people recognize that Office is part of the bigger strategy for the cloud," she said. "I know people have been talking about this stuff for a long time, but customers ... are really now embracing it much more than just talking about it."

Google beat Microsoft to the market for online productivity products with its Google Docs and Spreadsheets offering, which Microsoft has dismissed as too short on features to be a real competitor to its dominant Office products, which have some 500 million users globally and contribute to the Microsoft Business Division's $18.9 billion in fiscal 2008 revenue (more than 31 percent of the company's total).

But Microsoft clearly sees the niche Google has filled and appears unwilling to cede it to the Internet search giant. Microsoft hopes the offering will also cut down on piracy of Office.

"We just recognize that a one-size-fits-all solution isn't appropriate," Kapner said. "... Clearly we need to be respectful of what customers want."

Microsoft is building "lightweight" versions of the four key pieces of its Office suite, which will be sold to businesses through volume licensing agreements and as hosted services -- paid as a subscription -- much like the Microsoft online services the company provides now for its server products such as Exchange and Sharepoint.

Consumers will be able to get these Web companions to Microsoft's full-fledged productivity software through Office Live, which has both a free service supported by advertising and a paid offering.

Kapner said the company is still in the early stages -- calling a planned demonstration during today's Windows 7-focused keynote a "sneak peek" -- and, as such, it is not announcing specific plans for pricing the product.

The company gave few details on its schedule for bringing online Office to market, other than a planned technology preview -- limited to a select group -- by the end of the year. She did say that the online offerings are part of the next version of Office, currently going by the name Office 14. Microsoft has been mum on the product's schedule.

The online Office suite will work in the three major Web browsers: Internet Explorer, Firefox and Safari.

Microsoft does not envision people using the online version of Excel to work on an 8,000-line spreadsheet or write a major term paper with online Word. Instead, the company expects the online offerings to be best-suited for collaboration, editing and reviewing and other less-intense tasks.