Microsoft has hit back by announcing to launch a free version of its popular Office software suite that would run on the Internet.The online Word version will comeout next year.

Last week we heard from its arch rival Google about the launch of its OS Google Chrome.

The free versions will not include all the features of the regular desktop MS Word version. The software is
currently priced between $70 for a basic student version and about $350 for the professional version.

For the upcoming software suite Office 2010, Microsoft plans to let users edit video in PowerPoint and
manipulate images in MS Word -- features that would be unavailable in the free versions.

By giving away versions of its MS Office software, Microsoft risks cannibalizing one of its most profitable products but it seems that the software giant is gearing for a head-on with the search giant.