Office Live, a set of web-hosted services from Microsoft, will play a key role in delivering collaboration functions to users of its Office 2007 suite.

The current focus of Office Live is on small businesses, the segment that’s likely to find these services more valuable, but Microsoft is also adding Office Live services that will help students and home users share information with others, according to a spokesperson for the company.

Office 2007, unlike its predecessor Office 2003, is not just about personal productivity tools, but focused on collaboration, said Chris Capossela, corporate vice president of Microsoft's Information Worker Product Management Group.

However, collaboration features available in the Enterprise edition and some other versions of Office 2007 will not be offered in the Small Business version of Office 2007, Capossela said.

Small businesses want the features that are available in the Enterprise edition of Office 2007, but they don't want to have to install and run the servers for it. Instead Microsoft is developing Office Live services that complement the Office desktop for small business users.

Office Live will, for example, host some of the capabilities of Microsoft's Office SharePoint collaboration server, allowing small businesses to share documents with business associates.

Microsoft will package Office 2007 with different features for different categories of users. Eight versions have been announced in total, including Office Small Business, Office Home & Student, and Office Enterprise.

Some of the business capabilities in the enterprise version of Office 2007 will not be available in a version for students and home users. Home users will not, for example, be able to digitally protect documents they send to others.