The NWC Interview: Marja Koopmans; Director of Strategy, Microsoft Office Live

Microsoft will soon start selling Office Live, which offers Web hosting, e-mail access and business applications. Who's the target audience?

Office Live focuses on small businesses with less than 10 employees. It's the most underserved segment of the market when it comes to technology.

There's a free version, a $19.95-a-month version and a $39.95-a-month version. Can you make Microsoft-like margins off of this?

The business model is a combination of advertising, subscription revenue and transaction revenue. Most of these small businesses already have the Office applications installed.So this is mostly incremental revenue ?

Indeed. Spot on.

What service guarantees will you offer to Office Live users?

They'll be able to back up their data on a daily basis. And the administrator of the subscription can retrieve the entire Web site if, for example, something gets corrupted. The service aspect of Office Live ties into the Office applications, as well--it's very much a strategy of software plus services. So there is an integration with the Office applications that enables these small businesses to take their data offline and work with it there as well.

Will users of Office Live enjoy the advantage of immediate upgrades, or will they have to wait like everyone else for the patches you send out on the second Tuesday of each month?Yes, they'll get the benefit of that. And because Office Live is built on other products that we already have in the company, like Windows SharePoint Services 3, all the innovation that happens in those products will immediately become available to our customers.

Microsoft has never been able to replicate its desktop dominance on the Internet. How tough a spot does that put you in as software applications migrate online?

We've got over 160,000 small businesses using Office Live in beta today--probably more than half a million users. Those customers don't have to go to one vendor for their marketing applications, a second for their Web presence and a third for their business applications. If we listen to those beta customers, it's not that big of a threshold to go from Microsoft as your software supplier to Microsoft as your services supplier.There's a lot happening in the area of hosted applications, and some of its represents a direct threat to Microsoft. What do you think of Google's word processing and spreadsheet applications or Zoho's office suite?

I'm not the expert on those products. Most are still in beta, so I can't really comment on their functionality.

Let me ask it this way. Are you expecting to demolish those companies' software aspirations, the way you did Netscape's?

It's a large market. We're focusing on coming up with a new model that addresses the needs of our customers and helps them take advantage of what broadband penetration, Ajax technology and the like have made possible.

Microsoft generated $11.7 billion from its Office products in its last fiscal year. How long before Office Live is a billion-dollar product?I wish I could predict the future. But we've had great success with small businesses using our beta version. We're expecting that to continue. n