During a special press conference today, Microsoft unveiled Microsoft Office 365 - the premium home subscription service.

Along with a touch-friendly interface and social interactions, cloud functionality via Microsoft SkyDrive is one of the most important elements of the new Office suite, said Microsoft CEO Steve Ballmer.

Microsoft's Corporate VP of Office Kirk Koenigsbauer then took the stage to demonstrate exactly what Ballmer was talking about.

The cloud is "hugely important"

"This is a hugely important part of the release," Koenigsbauer said. "SkyDrive is incredibly fundamental to this release of Office."

Koenigsbauer demonstrated SkyDrive functionality between multiple devices, including a Samsung laptop and a Windows Phone device.

He opened up Microsoft Word, where his sign-in name "Kirk" was displayed in the upper-right corner.

Signing in to Microsoft Office 365 applications gives you easy access to your settings, recently used documents, templates, custom dictionaries, and more, Koenigsbauer said.

When he switched devices, Word asked him if he'd like to pick up in the document precisely where he left off on the previous device.

He showed how easily images, video and other multimedia can be inserted into documents from the web or from the Cloud.

Microsoft Office 365 display
Koenigsbauer showing off the latest features of Microsoft 365

Koenigsbauer also demonstrated how Microsoft Word will automatically resize for the size of your device, be it a laptop, tablet or smartphone, using the all-new "reading mode."

Office 365 will store data in the SkyDrive cloud "by default," he said, though local storage remains another option.

Cloud functionality also allows users to easily share documents with others via SkyDrive or post them to social media.

Microsoft Office 365 is looking to compete directly with Google's emerging sweet of Google Docs apps, so watch out for more news as the rivalry rages on.