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Microsoft has announced its biggest-ever customer for cloud computing after winning a contract to provide free services to a major Indian education body. Microsoft, which was built on the sale of expensive software that is installed on individual computers, has been forced by competition from Google and others to branch out into the fast-growing world of cloud computing.

The US software giant said yesterday it would provide its Live@edu communication and collaboration software to more than seven million students and half a million teachers through a deal with the All India Council for Technical Education.

The service, which Microsoft is providing for free as part of its education initiative, includes e-mail, Office Web applications, instant messaging and storage.

For users, cloud computing is inexpensive and simple, because it removes the need to spend time and money on installing software and managing servers.

Large government departments are prime targets for vendors such as Microsoft and Google.