Microsoft is releasing a new edition of Office to businesses this Wednesday and for the first time it’s adding free versions online versions of MS Word and other programs that work in a Web browser. It’s expected that these free apps will have fewer features than the desktop versions.

MS Office 2010 marks a milestone in the company’s efforts to stay abreast with an shift within the software industry that moves away from programs running locally on computers to free services that can be accessed from any browser over the Internet. Microsoft must walk a fine line and be careful not to make the free applications too appealing as to impact its lucrative software business negatively.
Software accounted for 29 percent of Microsoft’s revenue and 51 percent of its operating income in the most recent quarter.

In contrast to it’s competitor, 4 percent of companies use Google Apps today, according to Forrester Research.

In addition, the Outlook e-mail program will be able to pull in information from users’ outside social networks, such as Facebook and LinkedIn. It also adds new features to tame the ever-growing number of messages in the inbox, including a way to group all replies to a single thread under one line.