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Microsoft boss Steve Ballmer gave journalists and industry analysts a preview of the forthcoming Microsoft Office 2013 at a press conference in San Francisco last week, and dramatic changes are in store. Not only has Office’s appearance changed to be more like Windows 8, Microsoft is changing the way it is used and sold. This is the first version that has a “touch mode” for people running Office on tablet computers, and it’s the first version to target cloud computing.

Microsoft boss Steve Ballmer introduces the new Office at a press conference in San Francisco

In the old days, Microsoft Office was a boxed product that users installed from a DVD, often on two PCs: a desktop and a laptop. That will still be possible with Office 2013. However, Microsoft now wants you to buy Office as a subscription service that you can run from the cloud on up to five devices, which need not all be Windows PCs. In fact, you can “stream” an Office application to your PC, and a “click to run” feature means you can start using it immediately.

Rather than being tied to particular bits of hardware, the new cloud-based Office is tied to your Windows Live account. This means you can use your personalised copy of Office on a friend’s PC, or in a cybercafé, and resume reading or writing a document exactly where you left off. The “streamed” Office runs in its own sandbox, so it doesn’t affect the rest of the machine, and once you’ve closed it, it’s gone. All your documents are, of course, either saved in or backed up to a cloud service, usually Microsoft’s SkyDrive, and can be synced to your phone.

As Ballmer said in his introduction, “We’re clearly focused, starting today, with Office as a service“.

Individuals can now sign up for Office 365 Home Premium Preview, but there are also versions for small businesses, large businesses, and enterprises. The business versions offer more applications, and you will be able to buy them in bundles for 10 or 25 or more users. The business versions also use SharePoint Server to provide the SkyDrive cloud service, though you can still save things to the old SkyDrive that comes along with Windows Live Essentials.

The Home Premium version of Office 2103 gets you Microsoft Word, PowerPoint, Excel, Outlook, OneNote, Access and Publisher. I’m using a business version that also includes Project, InfoPath Designer, InfoPath Filer, Visio and Lync, as well as providing access to the collaboration and social sharing features of the hosted SharePoint and Microsoft Exchange email.

There are not too many new features beyond the nice template-filled start screens, though the interface is now extremely white and hospital-clean. The touch feature makes buttons bigger and moves them further apart so they’re easier to hit with a finger, but a mouse and keyboard are still better for doing real work.

Office 2013 is clearly aimed at the future, in supporting touch-based tablets (including ones that use ARM instead of Intel chips), cloud integration, and what the trade calls SaaS (Software as a Service). However, Microsoft is also trying to use it to cut off the past. Office 2013 works perfectly with Windows 7, but it won’t run on Windows XP or Vista. Microsoft is leaving these users behind, and also plans to stop providing security updates for them.

Almost half the installed base of 1.4 billion Windows PCs are still running 11-year-old XP or Vista, so Microsoft is taking a big risk. Office is, after all, Microsoft’s biggest cash-cow. In the financial quarter ending on June 30, the Business Division (mainly Office) brought in $6.3 billion, which compares with the Windows client division’s $4.1 billion. How many users will upgrade, and how many will stick with what they have? A lot of money is riding on your response.

Watching the Office vice president Kirk Koenigsbauer use Office 2013 at the press launch, I was very impressed by how fast and how fluid it looked in operation. It’s an impressive piece of work, if you know what you’re doing. But you wouldn’t be impressed if you saw my fumbling attempts to use it on the same tablet. It’s a much bigger jump to Office 2013 on Windows 8 than it was to Office 2010 on Windows 7, and business users will probably need much more retraining.

Kirk Koenigsbauer running Windows 8 and Office 2013 on a Perceptive Feel 82-inch touchscreen at the Microsoft press conference

On the other hand, it could well offer an easier upgrade path for businesses than switching to Apple iPads or a rival cloud service such as Google Apps and Docs. Microsoft’s “great leap forward” is intended to leapfrog both of those.

Office 2013 is now available as a free trial from , and it’s well worth taking a look into the future. But I suspect Windows 7/Office 2010 will be the standard for a few years yet.

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