Office Live isn't just an online variant of standard Microsoft tools like Word, Excel and PowerPoint used to take out Google's ever-increasing grip on the Internet market.

It's an Office-themed spin on the Live tools themselves, aimed at combining and simplifying the stages of a modern web-enabled business, and providing a suite of interoperable, easily learned tools under the Microsoft banner.

There's little point for single users, and larger users will quickly hit the limits, but the premise certainly has promise for many in the small business space.

There are three levels of service, with UK pricing to be confirmed. During beta it's all free, and you get your choice of domain name, too. You can transplant an existing domain into the system, but it's an all-or-nothing proposition. (There's also a side-project, Windows Live Custom Domains, where you can repoint your mail server and run a Hotmail/Windows Live Mail account under your name.)

Each level adds to the features and number of people you can sign up. The free Basic account provides 25 users, each with a 2GB (standard) Windows Live Mail account - albeit a slightly reskinned one.

This includes a Contacts book and Calendar, and access to other Microsoft services, such as MSN Spaces. Both of the paid services, Essentials and Premium, up this to 50 users, and give everyone the ability to log in via mobile devices (Windows Mobile, of course).

On the website side, the basic account comes with 500MB of space to play with; Essentials has 1GB, and Premium 2GB. All three use the same basic Site Designer to create your site and the pages on it. It works, but design genius doesn't live here.

Aside from altering the colours, the header image and the text, your finished website will look much like anybody else's - major edits are restricted to altering the layout of boxes within a central column, or expanding to 100 per cent liquid width - and inserting custom pages containing slideshows and other one-off content.

Annoyingly, you have to run Internet Explorer to use the editing tools, even with Microsoft's recent push towards system independence, and the modules provided to jazz up your site are extremely weak. The ability to create tabular data and integrate basic data capture pulls things up a bit, as does a series of statistics graphs to show how many visitors you get, and from where.

Office Live's websites may be meagre pickings, but it gets better with the rest of its business offering.

Instead of having to run and operate your own SharePoint server, with all its inherent trials, you can immediately start working with several powerful tools - an integrated business contact manager, private wiki, project workspaces, announcement and discussion pages for the whole team, complete with a permission system to restrict what everyone can poke around with.

The ability to store a central document library is perhaps the most useful of the set; collective bookmarks slightly less so. Again though, there's an issue.

While understandable for the site design tool to insist on IE - it uses a Ribbon type interface, and offers integrated uploading wizards and other useful timesavers that would have required extra work - the basic SharePoint system doesn't do anything particularly exciting in terms of functionality.

If sites like Backpack and every wiki on the planet can handle a visit from Firefox, there's no excuse for Office Live to gripe about browser make. Other problems are more of a matter of taste. Microsoft isn't going anywhere, so storing your data on its servers is less of a gamble than your average hosted service.

You can stick to using it for the online elements only, but a separate download - the free Office Accounting Express - offers a basic way to keep the books in line, and can also be combined with the ability to offer e-commerce in your site using PayPal's mix of credit card payment/account options.

Office Live is a strong tool, but only on the proviso that you fit its chosen market. The more freedom you want, and the more people involved in the loop, the less cheery you'll be about the way it handles things. Microsoft servers and the SharePoint features are worth the Premium rate, especially with the lack of per-user costs to pay.

Equally, if you lack web experience, getting everything out of the way is a tempting offer. However, with much above 50 users, or under 10, you'll find similar benefits by exploring other offerings that will work with your existing setup, rather than replacing it wholesale.