Microsoft has been seen by some in recent years, to have dragged their feet, when it came to embracing the internet. The handling of applications online has put pressure on the company’s traditional software business.

But Microsoft took a calculated bet that it could extend the life of its current, highly profitable business model without losing out on future opportunities online.

This is all part of the wide industry move towards “cloud computing” .  With the free, advertising supported version of Office, together with options that let companies buy some of its capabilities as online services, Microsoft has shown its full engagement with the cloud.

The aim of the company will now be to convert online users to paying customers. Only about 20% of Office revenues come from customers, and industry analysts expect only a small proportion to be lost as some users give up software to use the service.

Adoption of Google’s online applications have accelerated in the past year;  with new paying customers added at a rate three times faster than a year ago.