Microsoft has made a big move in launching the full version of its cloud-based Office suite, Office 365, on the web. The launch is aimed at a head-on competition with Google and other web-based business providers who are providing cheaper, web-only solutions.

Microsoft aims to retain customers back to its popular Office product by providing Excel spreadsheets, SharePoint collaboration tools, Outlook email and most of the Office 2010 features via desktops, laptops, and tablets.  Microsoft’s also looking to extend access on the popular Android, RIM and Apple smartphones via the web without the annoyance of installing and managing these products locally.

Google has made some headway with corporate customers by providing cheaper, online format of its Apps for Business office productivity program, threatening Microsoft’s market share and retention. With Office 365’s broader product offering, Microsoft is hoping to bounce back its share, where it lost small but important corporate customers to its competitor.

Microsoft Chief Executive Steve Ballmer presented the Office 365 suite of programs at an event in New York City on Tuesday morning. The suite is available in 40 markets and will cost $6 a month per user with programs like Office Web Apps and Exchange e-mail software. Customers can spend an additional $12 per month to get a full version of Office, including the popular Excel and Word programs, advanced archiving, unlimited storage and Microsoft messaging and communication systems. Users who will opt in for basic email services would only have to pay $2 per month, and for their advanced service, another $27 per month.

Ballmer even put a green spin on Microsoft’s new web-based offering, saying “the customer expects to cut travel costs and reduce carbon emissions by 30 percent after they retire the 60 servers by using Office on web.” Microsoft Office Division President Kurt DelBene said “Microsoft estimates the average 1,000-person company will save about $350,000 a year over a four-year period.”

Microsoft is gambling big on its cloud Office 365 suite programs because much of its revenue still comes from sales of the desktop version of Office. It would be interesting to see how Microsoft is generating revenue by diluting its cash flow from desktop version of Office to cloud Office 365, and seeking other ways to monetize this aspect of the enterprise cloud sector.