The next version of Microsoft Office, unveiled yesterday, is a dramatic departure from the software that millions of users have come to know, built for the cloud and for touch-based computing and packed with features that make it more social and, Microsoft hopes, more intuitive to use than past releases.

CEO Steve Ballmer announced that a technical preview of the new Office 365 - the online version of the product - is available now to download and test at He said it's the first version of Office built from the ground up for online use, and called it "the most ambitious release of Office we've ever done."

There will also be a shrink-wrapped version, called Office 2013, but it was the online version that Microsoft emphasised. The company demonstrated the new applications, including Word, PowerPoint, Excel, Outlook and OneNote, at a press event in San Francisco.

In each case the user interface appears cleaner, with far more white space than in previous versions, and the programs have been optimised for touch using fingers or a stylus. Many of the apps support pinch-to-zoom, for example, and documents can be moved around and off the screen with a fingertip.

The applications will also work well with a keyboard and mouse, according to Microsoft. The apps were all demonstrated on a Samsung tablet running the soon-to-be-released Windows 8 OS.

Word exemplifies some of the bigger changes. Upon opening the online version, the user first has to log in and then sees their recently used documents and templates. Because it's a cloud-based service, the new Word can remember what the user was doing when they last closed the program, regardless of what system they are using it on. The application can take them back to the point they left off typing in a document, for example.

Documents are stored in Microsoft's SkyDrive service by default, but users can choose to store them locally as well, said Microsoft's Kirk Koenigsbauer, who gave a 30-minute tour of the new Office.

Microsoft has also embedded some communications functions into Word. For example, if users are collaborating on a document and one of them edits a sentence, another user can tap the sentence and a box pops up showing who made the edits. The box includes presence information for that person, and if they're online at that moment, the user can send them an instant message from within Word.

Word also includes a new reading mode that mimics some of the features in Amazon's Kindle. Tapping the screen lets the user dim the background or change its colour. For example, in the dark, the user can make the background black and the text white.

The cloud apps can also be accessed from a smartphone, and in that case the new Word will format the text to fit the screen and put it in landscape mode if that's how the device is oriented.

SharePoint, an application for managing documents, creating workflows and other business functions, also gets a big makeover. The interface resembles that of Facebook, right down to the blue coloring, although it's a different shade of blue. Users can "like" and comment on documents that others have authored, much as Facebook users can comment on a status update.

SharePoint also recommends to a user which colleagues they should "follow," to keep track of documents they create or projects they are involved in, for example. And it recommends which documents they should track, based on the documents they've tracked in the past.

PowerPoint has a new Presentation Mode that gives the presenter a different interface from the one seen by people who are watching on, say, an overhead projector. The presenter can see the slide currently being displayed, but also a preview of the next slide in the sequence, to remind them what they'll need to talk about next. Presentation Mode also includes an area for notes, or a "cheat sheet," and a clock so the presenter can keep track of how long they've been talking.

Most of the applications revealed yesterday support touch using a finger or a stylus. In PowerPoint, the presenter can use a stylus to annotate a slide with handwritten notes, or use a stylus in place of a laser pointer, creating a red dot that moves around the screen on the overhead projector.

OneNote, a tool for digital note-taking, gets a new "radial menu" that takes some common tasks from the ribbon and makes them more accessible. It's a circular dial that sits in the top right of the screen (but presumably can be moved around) and gives quick access to things such as cut and paste, undo, font size and creating tags.

It seems very much optimised for handwritten notes using a finger or stylus, but like the other apps demonstrated, Microsoft said it works with a keyboard and mouse as well.

To end the presentation Microsoft showed what users can expect from its acquisition of Perceptive Pixel, which makes large, colour, touchscreen displays for commercial and business use.

Microsoft showed how the screen can be used for video conferencing using its Lync collaboration software. A person can add participants to the meeting by dragging their pictures from a contacts list on the screen.

One person can load a PowerPoint presentation onto the screen, which participants on the conference call can then mark up using touch gestures on the display. If they want to take meeting minutes, someone can start OneNote and it will automatically fill in some basic information, such as the participants on the video conference and the documents they've been collaborating on.