Microsoft's Office Live Workspace, just released into beta, makes it easy for small businesses, workgroups and organizations to collaborate online and share documents. Even individuals who want to track projects and access documents from more than one PC will find it useful. It's a surprisingly sophisticated service, and although there remain rough edges and puzzling oversights (which may or may not be addressed in the commercial release), it's a very impressive piece of work, especially considering its price tag -- free for the moment.

The service is not competing against online versions of office suites such as Google Docs or Zoho. It doesn't offer online versions of Word, Excel or PowerPoint. Rather, it's a way for departments, small offices and individuals to share documents and collaborate online.

Office Live Workspace lets you store documents, give other people access to those documents and collaborate with other people on the documents. To use it, you'll need a Windows Live ID. Once you sign up for the ID and service, you get your own workspace on the Web, which you can use to share documents and projects with others. Within this main area, you create individual workspaces for all your projects and documents.

Office Live Workspace is not primarily designed for creating documents directly from the Web. Although it has some rudimentary tools for creating documents, you primarily use the site by uploading documents from your PC or by creating documents using Office on your local PC and then saving them online. This integration with Office is both the site's greatest strength and an area that still needs some work, as we detail below. The site also includes tools for creating and editing a variety of day-to-day documents without having to use Office, including notes, lists, contact lists and event lists.

Once you've established your documents online, you can then invite other people to share them and set sharing rules -- for example, allowing certain people to edit documents and allowing others only to read them. The site doesn't have more sophisticated collaboration tools, such as those for managing workflow or for setting sophisticated rights to documents. That's not what it's designed for; Microsoft would prefer that you fork over the money for SharePoint Server for that.

Instead, Office Live Workspace is designed for small businesses and workgroups. Even individuals will find it useful, because it gives them access to their most important documents from any PC -- and lets them work together with organizations such as church groups or sports teams.

Getting started and creating a workspace

It's remarkably easy to create a new workspace. Click the New Workspace button and a pop-up box asks what type of workspace you want to create. You have a choice of a dozen different templates, including a project workspace, a job search workspace, a household workspace or a generic one that you can customize yourself.

Once you've made your choice, a different set of prebuilt generic documents will populate your workspace. For example, when I created a project workspace, Windows Live Workspace precreated documents, including PowerPoint presentations, a Word proposal template, a contact list, a project schedule and a to-do list.

You don't have to use these documents, of course, and in many cases, you won't. (In fact, you can delete them if you want to.) You can instead upload your own documents by clicking the Add File icon, browsing through your hard disk to the file you want and then adding it. But if you upload files, be prepared to spend a fair amount of time doing it. There's no way to upload more than one document at a time or to add an entire folder, which makes adding files a very laborious process.

You can share your documents with others on a workspace-by-workspace basis. So, for example, you can share a project workspace with co-workers, a sports team workspace with other members of the team and so on.

When you're in any individual workspace, click the Share button, and you'll be led through a series of screens that guide you through setting up rights -- who has access to the workspace and whether they can edit documents or just read them. Then type in the e-mail addresses of those with whom you want to share the workspace, and an e-mail is sent to them with details. (They'll need to have a Windows Live ID to share your workspace. If they don't already have one, the e-mail will include instructions for signing up.)