Microsoft is making significant efforts towards curing a leadership position as a cloud-computing services provider, and the company's announcement of Office 2013 is a key milestone. The new version of the popular Office productivity suite will be tightly combined with the company's SkyDrive cloud-storage service, which in turn is a key built-in feature of Windows 8.

Microsoft has not announced pricing yet for the new Office, but Windows 8 Pro upgrades cost only $40 provided users upgrade online directly from Microsoft. This is the most aggressive pricing the company has ever set for its flagship operating system, and it could be an indication of Microsoft's approach to Office upgrades.

During the Office 2013 announcement, Microsoft CEO Steve Ballmer highlighted the company's shift from packaged goods to services, noting that the new Office was "the first round of Office designed from the get-go as a service." The CEO insisted that Microsoft will continue to sell Office as a purely local client software, but he also used the "for now" qualifier several times during the keynote. Moreover, one of the customer quotes Ballmer emphasized after the demonstration focused solely on SkyDrive, the software giant's answer to Dropbox.

Office 2013 will save documents on SkyDrive by default, provided users log in with their Microsoft user ID. The first storage pool is free, but users will have to pay for additional storage if they want to add more data into the cloud. Microsoft did not discuss versions of Office for Apple's iOS or Google's Android at the presentation, but SkyDrive apps are already available.

While some may find it suspicious that the Windows 8 Pro upgrade is not more expensive, it actually makes sense considering that software companies thrive by collecting small fees on a regular basis. In other words, Microsoft aims to cash in from users who will upgrade to the paid version of SkyDrive. As more users add more data into the cloud, the conversion rate for paid users will automatically go up. Microsoft's vision is to have users seamlessly connect their assorted devices, including smartphones, tablets, desktop PCs, and laptops, through SkyDrive.

With low product costs, consumers are generally more willing to pay ongoing fees, and cloud storage is arguably convenient. It is unclear, however, where third-party services such as Dropbox fit into the picture with such integrated services like SkyDrive and Google Drive.