A great small business Web service from... Microsoft?

We got access to the new version of Office Live today. The service is scheduled to leave the beta phase in mid-November. Office Live is a suite of online applications targeted at the small business; it's not Word and Excel online. A quick look at the product (a full review is forthcoming) leaves a very positive impression.

Office Live is designed to get a small business on to the Web--both publicly, with a Web site, and privately, for collaboration and back-office work.

The service seduces the new user fast: Domain registration is easy and, most importantly, it is free. Microsoft supplies both e-mail and Web site hosting, and the tools to manage both are quite good. The hosted e-mail/calendar application is slick (more like Outlook than Gmail). The site designer is basic but easy to use, and it apes the new look and feel of Microsoft's upcoming Office suite. The service also provides clear statistics, including data on which search terms are landing users at the site. The smallest business could stop right here and be happy with what Microsoft was offering.

There's more to the suite, although additional features are not free. Office Live also has an advertising manager (it places ads on Windows Live search, not on Google, of course). There are also service levels beyond the free Office Live Basics. If you want to sync your e-mail with Outlook, for example, you'll need the Essentials ($20 a month) or Premium ($40 a month) package. Both also give you more storage space and more e-mail accounts. "Workspaces," Office Live's wiki tool, is also part of the paid subscriptions (I think that's a mistake--small businesses aren't going to know what they're missing unless wikis are free; I bet Google's new wiki service will be available for no charge).

Paid users also get a business contact manager, a basic competitor to Salesforce.com. This module doesn't have the extensibility of Salesforce's service, but it's probably got enough oomph for many small businesses. It's also very clearly organized--beginners won't have to spend much, if any, time in training to begin to use it.

The Premium version has more back-office tools, like a project management application and a time manager.

There are pieces missing, of course. There's no accounting built into the system, and no inventory management. The Web designer doesn't offer an easy way to put a blog on your site. And Office Live's composition and back-office tools only work in Internet Explorer (many modules download ActiveX components). But even so, Office Live is one of the most important online products I've seen--a very compelling suite of Web services for small business. I'm sure some pieces of the suite are less good than others, but a quick look tells me that Office Live delivers, for the most part, what it promises: Easy-to-use Web publishing, communication and collaboration features, all at a very reasonable fee.

Related stories:
News: Office Live almost out of the gate
Comparison: Office Live vs. Google Apps for Your Domain
Column: Office Live: The first hit is free