Microsoft's Office 365, the next piece of a broader play by Microsoft to bring its suite of Office server tools and collaboration work flows onto the cloud, is expected to launch sometime next year.

The company is already in the stages of testing it with small businesses and has a list of some 60,000 organizations, which are waiting to get access. In the meantime, Microsoft is continuing to fine-tune the product and expand its testing group--both in scale and the size of the companies that are being allowed in.

CNET was lucky enough to get early access to Office 365, which has been designed to work on a number of Web browsers, including Firefox and Safari--though not yet Chrome, which will work when the product is finalized. Office 365 is also cross-platform, so it works with both Macs and PCs. The good news is that in our brief testing, everything worked as advertised. The bad news is that you can't get it right now, and it's still a long ways off from something that lets you every feature out of the Office ecosystem without installing software.

What it is and what it isn't The first thing we should say up front is that Google Apps this is not. That's not to disparage the service, which hasn't even hatched yet, rather it's to point out that its core offering takes some of Microsoft's on-premises software tools and hosts them for companies. Microsoft still maintains consumer-facing Office and collaboration tools with its Windows Live services, Docs.com, and Office Web Apps, but Office 365 is a different animal.

What that means to the end user is that you get things like a hosted version of Outlook, Sharepoint (which has been nicknamed "Team Site" in the small business Office 365 variant), and Lync--the latest version of the recently rebranded Office Communicator platform--all without having to buy your own servers or worry about keeping them up to date. As such, Microsoft is positioning it as a subscription service that runs anywhere from $2 to $27 per user per month, depending on what size of a company you're running and what services you decide to include.

Notably absent from Office 365's overall interface is Microsoft's suite of Office Web Apps, which is where many of those comparisons to Google Docs have centered. The Office Web Apps only take center stage when working in the hosted version of SharePoint, where shared documents can be viewed and edited in its Office Web App counterpart. If you actually want to create something, there's still a reliance on having to have the Office software, or go off to the Office Web apps site itself, where users can save to their SharePoint.

Microsoft's current alternative for this is to send small-business users to its Office Web Apps site to do things like pen documents and put together presentations, while those who subscribe to a particular Office 365 tier can opt in for a subscription of Microsoft's Office 2010 plus software that can be installed locally, which ties into things like the Office 365 Team Site and Outlook through the Backstage menu in Office applications.

The net result of all of this is that Office 365 is not yet quite the true jump to a cohesive set of all of Microsoft's services, gone online and tied together in a way where you can hop from task to task between different 365 components. There is still an incredible reliance on the software itself, which is bound to change down the road, but for now makes basic workflows like creating a document and getting feedback from team members a hybrid experience, or one that involves juggling products.

It's getting cloudy The core of Office 365's UI centers on breaking up the hosted services into three chunks: home, Outlook, and Team Site. The links to these items stay the same no matter what you're doing, except if you hop over to Team Site, which jettisons you off to your own Sharepoint site.

Office 365&39's home screen lets you hop to Outlook and your team&39's &34'Home Site.&34'

Of the bunch, one of the most obvious draws is the the hosted version of Exchange, which companies can move all their mail to, or run alongside on-premises deployments. In our preview with it, the Web client of Outlook was fast loading and had a few nice tricks up its sleeve, like letting you open up Office attachments in a pop-up Window--something that's quite useful if you're on a public computer that does not have Office installed. It's also keyboard shortcut friendly, letting you cruise through a large group of unread messages.

Outlook&39's Web app shouldn&39't look all that different from what people are used to. Users get all the usual trimmings like e-mail, calendars, and contacts.

We couldn't perform a large-scale test on Lync, formerly known as Office Communicator, but we got a thorough demo last week as part of its launch. Lync is Microsoft's an instant messaging system with presence' an audio and video conferencing tool' and a voice call service. By design this is something that users install and run locally, so it sits outside of whatever software program you're using, though over time it's been built into more and more facets of the Office software.

How Lync translates to the Web experience is that users can get a slightly less capable version of it inside a browser window--all without having to install the software client. This has been implemented with a presence setting you can toggle that stays with you in both Office 365's home screen and Outlook, so if you're busy working on something, you can make a note of it from your inbox. You're also able to chat in the hosted Outlook Web app with anyone who is online.

One thing that was not yet available for a spin was Lync's planned client for Windows Phone 7 and the iPhone. This would let you see people's presence, and chat from your phone. When combined with Microsoft's Office software on Windows Phone 7, this will open things up for a more cohesive hand-off for people going back and forth between a computer and a phone.

The third branch of Office 365 is the Team Site, which should be quite familiar to SharePoint users, as it's got the same exact features and workflows. It's also one of the places where Office 365 shows its strengths, since you can get into a shared group of documents and very quickly give them a read and an edit in the same place without leaving the page to go off to some other property. This is what a cohesive Web office experience should feel like, though like we mentioned earlier, it still feels like its on its own island instead of being more tightly knit with the Office 365 start page, and Outlook client.

Team Sites should also not look too unfamiliar to SharePoint users.

Not so cloudy, yet While really impressive, there are still some questions over Microsoft's vision of making Office 365 less of a jump-off point for its software and more of a one-stop solution for getting things done from any computer, anywhere. Some of these issues have been alleviated, though in most cases, it depends on what tool you're in and how you're using it.

Another issue--though one that is arguably of smaller concern as a growing number of devices have gotten an always-on Internet connection--is that Office 365 still relies on an active connection to use it. Microsoft's trump card in this respect is that unlike Google, it's already got the software part of the equation taken care of, so that work can be done locally when need be. The only problem comes when you're asking people to jump between those two experiences. It also puts into question the utility of the package for workers who want to go software-free, yet stay as mobile as possible.

These items are likely to be addressed as the platform grows. In the meantime, it's worth looking at Office 365 for what it is, which is Microsoft continuing to move some of the very complicated pieces of its Office software ecosystem into the cloud--in part to make it easier for businesses large and small to get going. The Office software itself is a separate part of the equation--one that's well on its way in that direction.

Updated at 10:15 a.m. PDT to include additional pricing information, and clarification about SharePoint's nickname for the small business edition of the Office 365 product.