Other cloud enhancements include tighter integration with the company's SkyDrive cloud-storage service, which will let Office users save files online, making them accessible from multiple devices. Office will also save settings and preferences to the cloud, so they can be synchronized across a user's different computers. A feature called Office on Demand will even let users stream a full version of Office on the fly to PCs they don't own for use during specific, one-time sessions.

"The cloud is a big theme in this release. We see Microsoft's cloud strategy [for Office] evolving and taking another big step," Webster said.

However, the Office software is still installed on the user devices, unlike, for example, Google Apps, whose applications reside on Google servers and are accessed by users via a Web browser.

The conundrum for Microsoft is that there's a limit to the functionality that vendors can provide in applications that are fully hosted in the cloud. That's the case with Office Web Apps, for instance, the hosted version of Office that contains a subset of the full functionality.

"To run the full, high-octane versions of the applications, you need them installed on the user's machine," Webster said.