Microsoft has a history of leading the field with cloud services, having launched MSN Messenger back in 1999 and Hotmail in 1997. Back then, getting a service like email for free was surprising and for the average person, the ability to access email from any internet-connected computer was groundbreaking.

In fact, because of this, Hotmail was launched on July 4, American Independence Day, to highlight the fact that it offered you independence from ISP-based email. Those days are long past, and Microsoft has spent years playing catch-up with other cloud services like those offered by Google.

Microsoft originally dismissed the likes of Google Docs as nothing to worry about, but that is clearly not the case. Microsoft has stepped up a gear in the last few years and may yet be a cloud computing force to be reckoned with.

Being last to the party isn't always a bad thing, especially if you happen to own the suite of office applications used by most of the world. Google may have made inroads into that audience, but people have trusted Microsoft with their office documents for decades. All Microsoft needs to do is offer the functionality that makes Google Docs so attractive, but designed to look like a trusted product.

Office online

This is where the paid-for versions of Microsoft 365 and the free personal consumer service SkyDrive with Web Apps come in.

Microsoft 365, launched in June 2011, is the latest version of the clumsily named Business Productivity Online Suite (BPOS). It's a subscription-based online version of Microsoft Office, offering online collaboration and document sharing for businesses.

Microsoft 365 is Microsoft's answer to Google Apps, albeit a more expensive one. There aren't a lot of figures available for its uptake yet, but in November 2011, Office division chief Kurt DelBene said: "We are seeing positive momentum for Office 365. Customers are adopting Office 365 eight times faster than our previous service, and it's on track to become one of the fastest growing offers in Microsoft's history."

Of more interest to the ordinary user are SkyDrive and Live Mesh. SkyDrive has been around since 2007, and offers 25GB of free online storage via Windows Live. It also lets you use Web Apps – cut-down versions of tools like Excel and Word – to collaborate online with others in the creation of Office documents.

However, Web Apps don't offer the real-time collaboration of Google Apps. For example, you won't see characters on the screen as people type them; instead you're frozen out of the piece of the document where someone is typing, and can only see those changes once that person saves their work and you refresh your screen.

However, the actual look of Web Apps is one most of us are used to seeing in Office. It takes a lot of effort for people to learn new icons and new styles, so Microsoft still has the upper hand at least in the familiarity of its product.

Live Mesh is a handy free service that lets you sync your files across multiple PCs and locations. Just download the Live Mesh client onto each PC you use, assign the folder you want to sync, and whatever changes you make to documents in that folder will be automatically synced to your SkyDrive and to the other PCs in your 'mesh' when they are switched on.

All work and no play

Microsoft is increasingly becoming seen as the business side of cloud computing, but if Apple and Google let you work as well as play, Microsoft could soon find itself left behind.

Not that it doesn't have entertainment-streaming cloud services – Zune Pass is a cloud-based evolution of Microsoft's Zune media players, which were designed as the company's answer to the iPod. It's a subscription-based service that lets you stream music and music videos to devices like Windows Phone 7 handsets, Xbox 360s, Windows PCs and Zune MP3 players. It lets you download TV programmes and rent films too.

At its launch in 2010, Craig Eisler, corporate vice president of Microsoft's Interactive Entertainment Business Group said: "The integration between Zune, Windows Phone 7 and Xbox Live is an exciting advance in our entertainment offering. Zune enables users access to the entertainment they want, wherever they want it – and now, more people than ever will be able to enjoy the freedom and flexibility that the Zune service offers."

Well, not quite wherever they want it. Zune can only be used on four Microsoft devices and doesn't support Android or iOS. Although there is an online version of the service at zune.net, it doesn't work in a web browser – you need to be on a machine with the software installed.

It's expensive too, costing £8.99 a month for the music streaming service, with an extra charge for TV and film rental.

Xbox Live without the Xbox

Microsoft has other online content available via Xbox Live, letting you watch films and TV using your Xbox 360 or Windows Phone 7 handset. It hasn't taken these technologies fully into the cloud, but there are rumours that Xbox Live may be integrated into Windows 8.

Speaking to the Seattle Times, Microsoft vice president Mike Delman said: "Live has been successful on the Windows Phone. Live will be built into the PC. It will be the service where you get your entertainment."

There are more developments coming for Xbox Live. According to some sources, Microsoft's developers are looking at services like Onlive, the service that has proved that high-powered gaming can be delivered to mobile devices via the internet, and may be planning something similar.

As Microsoft cloud developer Brian Prince said at the GDC China conference, "You will be seeing things in the Xbox platform that are cloud-specific. I'm already doing it, it's really exciting, but I can't tell you about it or else I'll get fired."

So the future of cloud computing could be rosy for Microsoft, even if its present isn't much to shout about. We aren't writing off Redmond just yet, even if we would probably look elsewhere for most of our cloud services at the moment.