Microsoft will market a new version called Office 2013 that will be installed locally on devices, but the future of the suite lies online with the cloud-based version released in preview mode Monday, said CEO Steve Ballmer during a press conference that was webcast.

"This is the new generation of Office, where it is a service first," Ballmer said, adding that this new version of Office is the first one to be designed primarily as cloud-based software.

The new version of Office has also been designed to work best with Microsoft's new Windows 8 OS, in particular with its Metro interface, which is optimized for touch interfaces such as those in tablets.

"This is the most ambitious release of Office we've ever done," Ballmer said.

In addition to hand gestures, Office has also been optimized for stylus input devices, but works equally well with keyboards and mice, he said.