The big news in the Internet industry this week is that Microsoft is getting set to leap into the world of software-as-a-service via its signature Office software suite.

Considering the software consumer market is rapidly shifting its preferences in favor of the ease of online availabililty (as opposed to the traditional purchase-and-install model that’s been in place for decades), it makes sense for Microsoft to make this move. “The SaaS model enables users to pay a fee to the service provider that is proportional to the software usage without the need for purchasing the software,” writes Radhika Raghunath on TMC.net. “Companies are favoring this trend since they need not invest heavily on infrastructure, hardware and software. Organizations can also save on the manpower needs for setting up and maintaining the infrastructure needed to support the company’s requirements. … Microsoft’s competitor Google and a number of other startups already have several offerings in the field of on-demand computing.”

And, according to Tuesday’s Washington Post:

With some fanfare … the software giant said it was opening to the public a test version of its “Office Live Workspace,” a service that allows users to save Office documents such as memos and spreadsheets online so that they may be accessed by other users connected to the Web. …

The venerable software giant’s embrace of the Web, however, is relatively tentative.

Microsoft’s fortune has long rested with the sales of software that users have installed on their own computers, not computing over the Internet. Increasingly, however, as more computing is done online, the company’s dominance has been challenged, and it has sought to move to the Web.

While similar products offered by Google, Zoho and others allow users to do word processing and use spreadsheets online for free, the new Microsoft approach simply allows users who already have purchased their Office software to make easier use of it online.

Microsoft Office Live enables users to save more than 1,000 Microsoft Office documents to one place online. With the software, a user or collaborators can access the documents and make changes.

PC Magazine is already offering a review of the Beta version on its website, by Edward Mendelson (click here to check it out). The verdict?

With this beta of Microsoft Office Live Workspace, the Redmond giant takes a reasonably graceful leap onto the fast-moving bandwagon of free online sharing and collaboration sites. Office Live Workspace is a personal-size version of the well-established (and PC Magazine Editors’ Choice) Office Live Small Business service, with business-oriented features removed, leaving only ones for document sharing, simple discussions, and shared calendars and contacts. I found Office Live Workspace to be elegant, efficient, but not yet bug-free enough for me to trust my data to it.

When the bugs get worked out (we hope by the time the beta tag is removed), the good news will be that it’s tightly integrated with the copy of Microsoft Office on your desktop. You can simply click on an Edit button in Office Live and edit a document in Word or Excel. The bad news is that you can’t edit your online documents if you access them from a public or borrowed computer that doesn’t have Microsoft Office installed, which gets in the way of the service’s flexibility as an online collaboration tool. …

Microsoft Office Live Workspace is certainly worth looking at, since it doesn’t cost you anything, and probably worth using if you remember its limitations: that you can’t edit documents from a public computer that doesn’t have Office installed, and that you can share files only with friends and colleagues who have Windows Live accounts. …

All of this is in the early stages, so it will be interesting to watch how it plays out. Will Microsoft find success in the world of SaaS? If so, what will that mean to Google, and the industry in general? Feel free to share your thoughts in the comment section. And, as always, stay tuned to the Aplus.Net Blog for more details.