A Closer Look at Browser-Based Microsoft 365 Our reviewer has spent quality time with the new cloud-based suite of tools. Here's what his test drive turned up.

For all their potential, cloud-based application services such as Google Docs can still be downright spartan when it comes to software features. Yes, their cost is low or free in most cases, and their easy-to-use collaboration tools provide small businesses with a good first step toward building a mobile or remote workforce. But the feature sets of browser-based services still pale in comparison to full software suites such as Microsoft Office, which provides a wealth of tools and virtually endless customization of documents.

Yet cloud services are adding new users every day, and their products continue to improve, which makes them a long-term threat to Microsoft's profitable franchise. To head off its rivals, Microsoft has entered the market for cloud services targeted at small businesses. Earlier this year, the company launched a Web-based version of Office, called Office 365, which emerged from beta testing in April, priced at $6 per user per month.

When we began putting Office 365 through its paces, we found that the new versions of its ubiquitous applications, namely Word, Excel, PowerPoint and Outlook, were reasonably high-performing. Yet Microsoft also added new programs custom built for the cloud, including Team Sites, for document sharing, and Lync, for online collaboration. The company also rolled out a new in-document sharing technology built into the cloud versions of its Office applications.

Over the past several weeks, my assistant Alex and I have been test-driving these new tools. While they hold the promise of bringing an integrated, full-featured Office suite to small businesses over the Web, several of these new features aren't ready for prime time. What follows is a look at a few we tested and what we found.

Related: Review -- Microsoft Office 365 for Small-Business Users in the Cloud

Team Sites

What it is: The Team Sites application that comes with Office 365 offers a secure, easy-to-edit internal website that team members can use to post messages, share documents and gather information such as how-to documents and contact numbers. Think of it as a virtual company Intranet that is simple to create and accessible from anywhere.

What you might like about it: The Team Sites main page has a bulletin board for team members to post announcements and access shared documents and text. Adding additional pages to the Team Site is easy. They can be created using a basic page-builder tool which is more or less a Word document. Team Sites also has a search function that can be handy as your company's online presence grows.

What you might not like: The pages on Team Sites are a great idea in theory, but somebody in your company will have to build them from scratch. That's not hard -- it's essentially a blank Word document -- but it takes time and common agreement about what it should look like. If you start slapping up a document in Team Sites without input, confusion can ensue. As a communication tool, the bulletin board is simplistic and lacks the ability to add replies or create threads for different topics. Facebook, it's not.

Related: The Man Behind Google Docs on Opportunities in the Cloud

Microsoft says that the features it built into Team Site were specifically tailored to the needs of small businesses and it has no plans to add new features.

Microsoft Lync

What it is: Lync is an online meeting application that loads directly onto a user's desktop, as is traditional with Microsoft products. When it works, Lync lets team members collaborate in real time using instant messaging, video, online voice calling and screen sharing. It also plays a role in document sharing and other collaboration features in Office 365.

What you might like: For PC-based shops, the tool offers an effective way for groups to collaborate on work tasks in a secure, centrally-administered environment. We liked how meetings can be created instantly from an email conversation or how video conferencing and screen sharing can be initiated quickly.

What you might not like: Lync does not work well across platforms. As of now there is no Mac version -- Mac users can participate by email invitation only. Then they must use a stripped-down Web application that cuts out most of Lync's useful features. For example, while Mac users can see the host's desktop and chat, they can't video chat, share their own desktop or collaborate in documents, making Lync more or less an instant messaging tool for them.

Microsoft says it plans to release a full-featured version of Lync later this year.

Shared Office Documents

What it is: Office 365 allows users to collaborate on documents, through a share button placed directly in the full versions of Word, Excel and PowerPoint running on a user's PC. In theory, it opens the door to the holy grail of collaboration: all the features of a sophisticated document management system in a document that still can be shared in real time.

What you might like: The sharing function allows you to access a first-rate email client, word processor and spreadsheet tool in a way that can be accessed by all members of your team -- as they work on it. In the brief glimpses of functionality we saw with this tool, it has the potential for changing how you handle documents in your business.

What you might not like: To put it bluntly, document sharing is, as of now, nothing more than a concept for a smaller firms. First, it requires an updated version of Microsoft Office which supports Office 365 and which must be downloaded and installed. It's a major upgrade and doing it took both Alex and I more than an hour each. Next, we spent at least another hour of trial and error, learning how to save properly, share documents and collaborate in any meaningful way.

If you also factor in the limited Apple OS support, the clunky relationship between it and Microsoft's SharePoint servers, getting this to work requires an investment that I can't see an average small business making.

The company says that, supported properly, sharing works well. But Microsoft also says it plans to smooth out the process of how these features will work online in future editions.

"We have some work to do head of us on this," says John Betz, director of online services for Microsoft. "The idea for Office 365 is to be able to do it all from any document, web browser, device or computer. The goal here is to make that as easy as possible for end-user."

Bottom line: Microsoft Office 365 offers reasonable collaboration options for Microsoft-based shops. Many businesses will benefit from the basic Web-based tools found in Word and Excel. And it's a product certainly worth testing. But for the advanced features, it's possible that only shops that actually need those specific functions – such as those in publishing or advanced document management -- may find the tools worth the hassle.

Related: The Pros and Cons of Cloud-Based Amazon Web Services