Microsoft is updating its business-oriented Office 365 services and providing a new low-cost entry for small businesses, all of which offer the power and flexibility of Exchange, SharePoint, and Lync in the cloud. And there are a few key takeaways for business users curious about how this offering differs from the consumer-oriented Office 365 version launched last month.

First, the Home Premium subscription is licensed for a household (or individual) and comes with five installs of Office 2013 Professional (and/or Office: Mac 2011) that can be shared by multiple people in a family. Second, Home Premium doesn't include Exchange Online, SharePoint Online, or Lync Online like the business-oriented versions of Office 365; instead, users are expected to use consumer-oriented services such as Outlook.com and SkyDrive. And third, Office 365 Home Premium is really inexpensive at just $99.99 per year, assuming of course you need multiple copies of Office.

Most IT pros are probably familiar with the fact that Microsoft first launched Office 365, solely for businesses of various sizes, a few years back. And most are probably familiar with the basic functionality of these offerings, and the value proposition. So let’s focus on what’s changed.

Microsoft doesn’t provide version numbers for Office 365, part of its whole reimagining of its product offerings as online services. But when you consider the changes to both the services themselves and to the Office suite that comes with many of the subscriptions, it’s fair to say that this is a major update, a version 2.0 of sorts. (In January of 2013, Microsoft launched Office 365 Home Premium, a new version of Office 365 aimed at households and individuals.You can learn more about Office 365 Home Premium in my SuperSite review.)

A New Office

Office 365 is of course being upgraded with the latest Office, Office 2013, or what Microsoft curiously calls “the New Office.” This is a major upgrade of the suite with amazing new Click-to-Run deployment and installment technologies, a related Office On Demand feature that lets you run the core Office applications “on the fly” from any PC by streaming it temporarily over the Internet, and a crisp, clean new UI that’s as home on traditional PCs as it is on new Windows 8 devices. Office 2013 availability of course varies between Office 365 subscriptions, but most of the offerings also include a nicely revamped version of the Office Web Apps, web-based versions of Word, Excel, PowerPoint, and OneNote that work well in any modern, HTML 5-compliant browser and offer an increasingly sophisticated set of functionality related to document editing and multi-user collaboration.

For the Office 365 subscriptions, those who do qualify for an Office suite will now receive Office 2013 Professional Plus. (Those that don’t can license Office Pro Plus for $144.99 per user per year.) This includes Word, PowerPoint, Excel, Outlook, OneNote, Access, Publisher, and Lync 2013. Aside from the previously noted Click-to-Run capabilities, the big change from previous Office 365 versions with Office 2010 is that licensing is now per user not per device. So each user with access to Office 2013 Pro Plus can install it on up to 5 devices. Today, that means Windows PCs and devices as well as Macs, but there are strong hints that other devices—like Apple iPads and possible Android tablets—are coming as well.

Additionally, the App-V-based Office 2013 install means that you can run Office 2013 Pro Plus side by side with your previous Office version, which can be helpful for users with finicky add-ins or those that wish to move forward at their own pace.

New Office 365 Subscriptions

In addition to the Office 365 subscriptions that existed previously, and the consumer-oriented Office 365 Home Premium offering that Microsoft announced last month, there are two major new Office 365 versions being offered to businesses this year, Office 365 Small Business Premium and Office 365 for Midsized Businesses.

Office 365 Small Business Premium is aimed at businesses with fewer than10 employees and costs $12.50 per user per month. The big deal here is simplicity: Microsoft realizes that these businesses have no IT on staff so it has designed the setup and admin experience in such a way that any employee will be able to get up and running successfully.

Office 365 for Midsized Businesses takes the next step, aiming for 10 to 250 users, and costs $15 per user per month. Building off the small business version, it offers more advanced capabilities around Group Policy management, PowerShell, and federation capabilities so you can mix and match between the cloud and your on-premises infrastructure. It’s still simple, from an admin and deployment standpoint, but more powerful too.

New Focuses on Devices and Multi-Touch

Office 365, like Office 2013, has been redesigned to work well with a growing range of devices, most of which will support multi-touch capabilities. This support takes a few different forms, including the full-blown Office applications on Windows, which work well with keyboard and mouse, touch, and even pen input, Office for Mac, which hasn’t yet been updated to match the Windows version but supports Apple’s trendy desktop/laptop OS, and a growing set of mobile apps that run on Windows Phone, iOS (iPhone, iPad) and Android handsets and tablets.

That last bit is particularly interesting. Windows Phone 8, of course, comes with the latest version of Office Mobile, which includes versions of Word, Excel, PowerPoint, OneNote, and Outlook tailored for the small screens of such devices, and there are SharePoint and Lync apps for the platform as well. Microsoft provides SharePoint and Lync 2013 apps for iOS as well, and will soon for Android. And there are even two new Windows 8 “Metro-style” mobile apps, for OneNote and Lync that perhaps point the way to the Office of the future.

Deeper Social Integration

With this generation of Office products, Microsoft is firmly embracing the social networking wave in a number of ways. Previously separate Outlook social connectors for services such as Facebook and LinkedIn now ship as part of Outlook 2013, and of course you can integrate with Skype, Lync, or both, your choice. On the server/services side, SharePoint’s social networking prowess, which was somewhat ignored or misunderstood in some quarters with the previous release, has been expanded and improved. And with Microsoft Yammer acquisition, the most popular enterprise social networking solution is available via many Office 365 subscriptions at no cost. Further integration between SharePoint and Yammer is coming further down the road as well.

Deeper Cloud Integration

As it’s done with Windows 8, Office 2013 and Office 365 both straddle the line between work and home, allowing users to utilize familiar interfaces in both contexts. So where the business-oriented versions of Office 365 come with SharePoint Online for document management and collaboration, and integrate seamlessly with Office applications, users are also free to access their own personal documents through SkyDrive. And they can mix and match: In Office 2013, you can configure multiple SharePoint and/or SkyDrive accounts, and move between the different document repositories as needed. And in Windows 7 and 8, users can install local sync solutions for both SkyDrive and SharePoint (the latter of which is unfortunately called SkyDrive Pro) to access those documents offline. And yes, you can install both side-by-side.

New Features in SharePoint Online

In 2013 guise, the new SharePoint offers a friendlier new web interface, in keeping with the general Office 365 user experience refresh. It supports drag and drop file management and other niceties and (the again unfortunately named) SkyDrive Pro replaces SharePoint MySites as each user’s document repository in the cloud. (As with SkyDrive, there is a cloud service and PC sync application with the same name, further muddying the waters.) SharePoint is fully extensible with an apps marketplace whose apps use the same underlying web-based technologies as do Office 2013 apps, so I expect to see a vibrant market for add-ons. SharePoint will be further supported by multiple mobile apps, including one for SkyDrive Pro and one for the social networking aspects of the service, both of which will be available on most platforms.

New Features in Exchange Online

The new Exchange expands on Microsoft’s dominant messaging solution with Data Loss Prevention functionality, an Exchange eDiscovery Center for compliance officers, a gorgeous and useful new version of the Outlook Web App that even supports multi-touch interfaces, hybrid deployment options for those organizations that need to keep some data in-house, and a streamlined Exchange Administration Center.

 

New Features in Lync Online

Microsoft’s latest Office server provides a single interface for voice calls, video calls, meetings, presence, and instant messaging, and in 2013 it will expand to include Skype federation functionality, deepening that consumer/business interconnection. (It can already federate with such services as Windows Live Messenger, Yahoo! Messenger, AOL Instant Messenger and Google Talk.) Lync already integrates with Outlook and is available in mobile app versions for Windows 8/RT, Windows Phone 8, iOS (iPad/iPhone), and, soon, Android devices too. Those who use Lync’s video conferencing capabilities will appreciate the change to standards-based H.264 video compression for a higher quality experience.

A Schedule for Change

With the move to this second generation of Office 365 services, Microsoft is also fine-tuning its plan to deliver updates going forward. And while it will continue on the quarterly update cycle it established originally for Office 365, there are two major changes to the schedule. First, Microsoft plans to be more aggressive adding more features and it is revamping its engineering cycle to accommodate a faster rate of change. Second, this schedule includes, for the first time, the Office 2013 suite of applications as well. So there will be quarterly updates to that software as well, not just bug fixes but new features.

Of course, not everyone will want to move so quickly. Microsoft is allowing customers to rollout out this major new update as well as future updates for up to 12 months. And it’s configurable across users, so you can opt to pilot some users on new versions more quickly than others to gather feedback and make sure the changes don’t break any existing systems.

For those already on Office 365, you can move to the new version starting February 27. This includes the new admin interfaces, the new web experiences for SharePoint Online, Exchange Online, and Lync Online, as well as the new Office 2013 Professional Plus suite if your subscription supports it.

Overall, Office 365 remains the bellwether for Microsoft’s move from traditionally-delivered software to online services, and the prognosis so far is overwhelmingly positive. This newly expanded set of subscription services is powerful, affordable, and correctly designed for the markets it addresses. With this latest version, Office 365 has gotten demonstrably better. This is a solution you’re going to want to evaluate soon.