Microsoft is working to finalize the plan in the next version of Office software

Many of the features once planned as part of Microsoft's .Net My Services initiative--a consumer-focused Web services strategy--may now find their way into Office, sources said.

Microsoft office 2007 has not set a release date for the next version of the business software, which has been referred to internally as Office.Net or Next Generation Office. Microsoft shipped Office XP, the current version of the software package, one year ago this month. New versions typically follow the current release by 18 to 24 months.

News of the next version comes as rival Sun Microsystems announces a new version of its StarOffice package, which is an alternative to Microsoft Office. Sun on Tuesday said it will begin selling the software May 21, priced at $75.95.

Among companies, "what's most interesting is the sudden increase in interest in StarOffice," said Gartner analyst David Smith. "We're not seeing much deployment of it, but (there is) tremendous interest, and companies (are) setting up testing labs."

Though StarOffice interest may be on the rise, Microsoft still controls more than 95 percent of the desktop business software market, according to Gartner.

Microsoft isn't standing still. For the next version of Office, the company is considering an optional subscription version tied to Web services based on Extensible Markup Language (XML). Those services, which could include some of the online calendaring and collaboration features envisioned for .Net My Services, would also be available separately for Office copies sold at retail or on new PCs, sources said.

.Net My Services, announced more than a year ago, was originally envisioned as a "digital safe-deposit box" for hosting and delivering personal information while providing an array of services, ranging from commerce to communications, in partnership with Web retailers such as eBay.

Microsoft Office Ultimate 2007 had hoped that consumers would pay fees that would cover the bulk of the expense to run these one-stop services, which would manage passwords, calendars and other personal information.

Instead, the plan has been the source of continual confusion among potential customers, has encountered a series of problems with its underlying technology, and has faced internal frustration that sources say even led to its top executive being reassigned.

In court last week testifying as part of Microsoft's antitrust trial, Jim Allchin, the company's senior vice president responsible for Windows, described .Net My Services as being "in a little bit of disarray."
Microsoft has said it plans to retool .Net My Services for corporate customers, so that they can more easily share information over local area networks (LANs).

Now, Microsoft appears to be linking .Net My Services to Office--its cash cow--in the hope of garnering more interest in paid services. That plan would put access to Microsoft's Web services within the reach of millions of Office users. This week, Microsoft said that customers had purchased the right to install 60 million copies of Office XP.

One new Web service being considered by Microsoft would provide customers with Web-based e-mail capable of connecting to multiple services and linking to Outlook. Another service would take a similar approach to calendaring and online collaboration. The service would, for instance, allow online calendars to be updated and linked to a wireless handheld. Another service would provide online data storage for documents.