Office 365 is available from any computer with access to the internet, combines familiar Office programs Word, Outlook, Excel and PowerPoint.
The online suite is a subscription service, available to business employees, schools and universities for $6 (£3.75) per person a month.
Microsoft’s new cloud-based productivity app system will directly compete with Google Apps, which currently claims more than 30 million users. Google currently charges an average subscription of $5 (£3.12) per user a month for the service.
Microsoft’s business arm, which houses Office, was the company’s most profitable division in the first nine months of its financial year. Operating profits were up 20% year on year to $10.2bn (£6.37bn).
The value of the cloud computing market is set to from $68.3bn (£42.7bn) in 2010 to $148.8bn (£92.9bn) in 2014, according to Gartner.