Microsoft has launched Microsoft Office Live Workspace, a web-based version of Microsoft Office that lets people access documents online and share files with other users.

The new strategy departs from the company’s current model of selling licences for software that runs locally on computers, and takes it a little closer to competitor Google which offers online versions of its productivity applications suite Docs, which includes spreadsheet, word processor and presentation software.

The move came just as Adobe announced that it had bought online word processor company, Buzzword.

The announcements by Adobe and Microsoft signal the online office productivity market is heating up. IBM announced last month its Lotus Symphony productivity software, which boasted 100,000 downloads in its first week of availability.

Microsoft’s Office Live Workspace is currently in a beta phase and open to any user to register.

Available free, Office Live Workspace is among the first in a new wave of online services from the company. Users can save more than 1,000 Office documents to one place online and access them through the web, and share the documents with others in a password-protected, invitation-only online workspace.

If users want to edit their documents, they will have to open them using an installed copy of Microsoft Office. Other people who don't have a desktop version of Office can still view and comment on other people's documents through a browser.

Microsoft also said that it would sell its Exchange, SharePoint and Communications server software as online services over the Internet to enterprises with 5,000 or more users.