Cloud computing was a key feature announced as Microsoft presented the upcoming version of its Office suite Monday.
"In terms of competition, migrating Office to the cloud is critical," Jim McGregor, a principal analyst with Tirias Research, told ComputerWorld. "For Microsoft, Office is and should be the cornerstone of a much larger cloud-service strategy that I'm sure we will hear more about."
Low-cost Office alternatives and a growing migration to cloud-based applications, like Google Apps, represent significant challenges to Microsoft's flagship software offering, analysis said.
Moving to the cloud will allow Office users to access their files across multiple devices.
"I've expected that the new Office would support true, seamless file synchronization across mobile and desktop environments," Brad Shimmin, an analyst with CurrentAnalysis, said.
"Such capability will be required, frankly, if Microsoft is to compete with Google over the long term."
Google is far ahead of Microsoft in the cloud business, research firm Gartner said.
"Google's call to action is appealing to organizations generally not pleased with their current situation," Gartner noted in a report.
"What Google is doing better than anyone is integrating all the applications and services they offer into one relatively inexpensive solution that is easy to use and seamlessly maintained," McGregor said.
"As the Google applications mature and become more competitive with other standard applications, all the Google cloud applications will pose a greater threat to Microsoft."