Microsoft is to let smaller businesses use some of its key software applications over the internet later this year.

Last September, the company opened its hosted software programme, called Microsoft Online Services, to businesses around the globe with more than 5,000 users.

Now, as it moves rapidly towards the Internet-centric computing favoured by competitors Google and, Microsoft has opened up the service to general use.

Businesses pay a per-user subscription fee to access applications (such as email) hosted on Microsoft's servers, which usually works out cheaper than installing applications on their own hardware. Other advantages include faster software updates and lower maintenance costs.

Microsoft, which built its fortune on so-called shrink-wrapped software, was criticised for moving too slowly into an area many analysts believe will develop into a significant portion of enterprise and small-business computing.

A limited beta trial of the services for small US companies is due to start this week. Company Chairman Bill Gates is also expected to go into further detail at this week's Seattle conference on its SharePoint software.

The hosted applications will include Exchange Server 2007 (used for email) Office SharePoint Server 2007 (a content management and collaboration tool) and Office Live Meeting (for audio and video conferencing over the web).

Microsoft said a single web interface can be used to managed those applications, performing tasks such as configuring access for users, tracking support requests and managing licences.

New subscription customers will also be able to blend their online software with software installed on their own servers.

Microsoft is trying not to alienate existing customers paying for what some call a pricey insurance plan, called Software Assurance. The plan, for on-premise software, lets customers obtain Microsoft product upgrades and other incentives for free. Microsoft is offering Online Services at a discount for those who pay for Software Assurance.

Companies already using Online Services include Blockbuster and Coca-Cola, and the services for smaller businesses should be available by the end of the year.