Here Comes Microsoft 2.0: Embracing Lightweight, Open Source Apps Online

Microsoft has made a number of announcements in the last 24 hours that show it is not going to let the oncoming Google Office steal its thunder without a fight. It looks to me like the transformation of Microsoft into a Web 2.0 company is underway at this moment and is happening faster than many people expected. Redmond has announced that it is partnering with PHP commercialization firm Zend, it has released a free, lightweight accounting application integrated with online activities and it will be bringing the first version of Office Live out of beta in two weeks. A new cross vendor ad management service will allow customers to buy AdSense as well as Microsoft ads and there will be a new hosted CRM service. These are huge changes.

The company announced this morning a multi-year relationship with Israeli PHP company Zend Technologies. The collaboration will focus on making it easier for PHP developers to program against Windows Server 2003 and in the future Longhorn. This is important because it’s a clear signal of recognition that the company can’t use its market share to force developers to use its .NET platform. The partnership with Zend looks like a great move towards increased participation in the larger development ecosystem.

Yesterday Microsoft released a free downloadable accounting program called Office Accounting Express 2007. That software focuses on integrating with online sites like eBay, PayPal and Office Live. See for comparison Google’s partnership with Intuit.

Today it was announced that the first version of Office Live will come out of beta on the 14th of November. Office Live is a free service with premium services for small businesses. It includes online storage, webmail and calendaring. The highest level of premium service will cost a mere $40 per month for up to 50 users.

According to InfoWorld’s coverage, when Office Live comes out of beta, two new services will become available in beta stage: Office Live adManager and Office Live Business Contact Manager. AdManager will let customers purchase and manage ad campaigns on any ad platform including Google, Yahoo! and Ask as well as Microsoft’s own platform. The Business Contact Manager will be a hosted CRM service.

Got all that? Microsoft is partnering with an open source facilitator, releasing free rich internet applications, online storage, web mail, calendaring, hosted CRM and a non-walled garden ad campaign manager. The fight between Microsoft and Google is getting very interesting.