I attended the UK launch of Office 365 yesterday and found it a puzzling affair. The company chose to focus on small businesses, and what we got was several examples of customers who had discovered the advantages of storing documents online. We were even shown a live video conference with a jerky, embarrassing webcam stream adding zero business value and reminding me of NetMeeting back in 1995 – which by the way was a rather cool product. Most of what we saw could have been done equally well in Google Apps, except for a demo of the vile SharePoint Workspace for offline editing of a shared document, though if you were paying attention you could see that the presenter was not really offline at all.

There seems to be a large amount of point-missing going on.

There is also a common misconception that Office 365 is “Office in the cloud”, based on Office Web Apps. Although Office Web Apps is an interesting and occasionally useful feature, it is well down the list of what matters in Office 365. It is more accurate to say that Office 365 is for those who do not want to edit documents in the browser.

I am guessing that Microsoft’s focus on small businesses is partly a political matter. Microsoft has to offer an enterprise story and it does, with four enterprise plans, but it is a sensitive matter considering Microsoft’s relationship with partners, who get to sell less hardware and will make less money installing and maintaining complex server applications like Exchange and SharePoint. The, umm, messaging at the Worldwide Partner Conference next month is something I will be watching with interest.

The main point of Office 365 is a simple one: that instead of running Exchange and SharePoint yourself, or with a partner, you use these products on a multi-tenant basis in Microsoft’s cloud. This has been possible for some time with BPOS (Business Productivity Online Suite), but with Office 365 the products are updated to the latest 2010 versions and the marketing has stepped up a gear.

I was glad to attend yesterday’s event though, because I got to talk with Microsoft’s Simon May and Jo Carpenter after the briefing, and they answered some of my questions.

The first was: what is really in Office 365, in terms of detailed features? You can get this information here, in the Service Description documents for the various components. If you are wondering what features of on-premise SharePoint are not available in the Office 365 version, for example, this is where you can find out. There is also a Support Service Description that sets out exactly what support is available, including response time objectives. Reading these documents is also a reminder of how deep these products are, especially SharePoint which is a programmable platform with a wide range of services.

That leads on to my second question: what is the developer story in Office 365? SharePoint is build on ASP.NET, and you can code SharePoint applications in Visual Studio and deploy them to Office 365. Not all the services available in on-premise SharePoint are in the online version, but there is a decent subset. Microsoft has a Sharepoint Online for Office 365 Developer Guide with more details.

Now start joining the dots with technologies like Active Directory Federation Services – single sign-on to Office 365 using on-premise Active Directory – and Windows Azure which offers hosted SQL Server and App Fabric middleware. What about using Office 365 not only for documents and email, but also as a portal for cloud-hosted enterprise applications?

That makes sense to me, though there are still limitations. Here is a thread where someone asks:

Does some know if it is possible to make a database connection with Office365, SharePoint (Designer) and SQL Azure database ?

and the answer from Microsoft’s Mark Kashman on the SharePoint team:

You cannot do this via SharePoint Designer today. What you can do is to create a Silverlight or javaScript client application that calls out to SQL Azure.

In the near future, we are designing a way to make these connections using the base SharePoint technology called BCS (Business Connectivity Services) where then you could develop a service to service to SQL Azure.

If you cannot wait, check out the Cloud Connector for SharePoint 2010 from Layer 2 GmbH.

It seems obvious that Office 365 and Azure together have potential as a developer platform.

What about third-party applications and extensions for Office 365? This is another thing that Microsoft did not talk about yesterday; but it seems to me that there is potential here as well. It is not well integrated, but you can search Microsoft Pinpoint for Office 365 applications and get some results. If Office 365 succeeds, and I think it will, there is an opportunity for developers here.