Quick, what's the world's most popular photo-sharing application? It's not Photobucket or Flickr or Picasa. It's Facebook, where users share billions of new photos every month.

"The Facebook Photos application may or may not be the best, but it is the most popular, by an absurd factor," notes Pat Kinsel. "More photos are uploaded to Facebook every month than have been uploaded to Flickr since the beginning."

Kinsel works for Microsoft (Nasdaq: MSFT), which happens to make the world's most popular document authoring programs, including Microsoft Word, PowerPoint, and Excel. Specifically, he's a product manager at Microsoft FUSE Labs, which, as my colleague Greg reported when the group was formed last fall, is charged with applying social computing concepts to Microsoft business and entertainment products. So it was a natural question when Kinsel and others at FUSE Labs (the acronym stands for Future Social Experience) decided to ask earlier this year what it might look like if sharing documents on Facebook became as prevalent as sharing photos. The result was something called Docs.com.

"We want to understand what it is that makes Facebook Photos so popular, and whether we, in the lab, can make documents equally easy to share and collaborate on. That's the key, driving question," says Kinsel.

Docs.com is, in a nutshell, a version of Microsoft's Office Web Apps for Facebook users. Built by a small FUSE Labs team in Redmond, WA, and Cambridge, MA, in just under four months, it's an unusual and significant effort for Microsoft. For one thing, it's a unique marriage of software from both companies: when users log into Docs.com, they're using Palo Alto, CA-based Facebook's authentication system. When they create, edit, and save documents, they're using authoring and cloud storage software created by Microsoft's Office Web Apps and Windows Azure teams. And when they share their documents with other Facebook users, they're tapping into Facebook's Open Graph application programming interface. It's perhaps the first time Microsoft has integrated one of its products so thoroughly into another company's Web infrastructure.

For another, Docs.com represents a dramatic foray into consumer-level social sharing at a company that has previously restricted most of its social computing features to its business software, such as Office 2010 and its SharePoint server for collaborative Web publishing. Given that it was built quickly -- "we are trying to work at Web speed," Kinsel says -- and that it exploits existing features of Azure, Microsoft's cloud computing infrastructure, Docs.com could come to be seen as a pathbreaking experiment for the company, one that influences Microsoft's product strategies in other markets.

Even more broadly, a close relationship with Facebook (in which the software giant owns a 1.6 percent stake) could be Microsoft's ticket to connecting with more consumers online. To prop up cash cows like Office and compete with all the other Web companies muscling in on its productivity-apps territory -- from Google on the big end to San Francisco start-up Crocodoc on the other -- the company needs a way to capture a Facebook-sized chunk of the Internet crowd. And working with Facebook on shared documents could lead to collaborations in other areas like social search, gaming, and communication.

Of course, those are mighty big hopes to pin on one experimental product from a single Microsoft lab. But already, the Docs.com application on Facebook has nearly 100,000 monthly active users, including the federal government, which used it to post a timeline for the Obama Administration's response to the DeepWater Horizon oil spill. FUSE Labs removed a wait list for access to the service early this month, and last week, it introduced the most significant upgrade to Docs.com since the service was introduced at Facebook's f8 developer conference in April: the ability for owners of Facebook fan pages to create documents and then reassign the authorship of those documents to the fan pages themselves.

That may sound obscure, but it was actually the single most requested feature among early Docs.com users, according to Kinsel, who is a 2007 graduate of Boston University and worked from Microsoft's Cambridge, MA, lab until last fall. Facebook originally created fan pages to give businesses, celebrities, publications, and other entities a way around the 5,000-friend limit on conventional Facebook profiles. The new Docs.com fan page feature means two things: It gives Facebook fan page administrators a new channel for communicating with their fans (i.e., friends), in the form of Word, PowerPoint, or Excel documents that are saved on Docs.com but show up on the fan page's wall, just like any other piece of content shared on Facebook. And it means that for fan pages with multiple owners, administrators can edit documents jointly.

"It creates a shared, collaborative space," says Kinsel, who led the development of Docs.com and oversees Microsoft's collaboration with Facebook's engineering team. "Say FUSE Labs wanted to put out an update next week. I could easily create a document on Docs.com, and by changing the author [to the FUSE Labs fan page] we could collaborate on it and then publish it out to the page."

The initial vision for Docs.com, Kinsel says, was simply to allow individual Facebook users to create documents, share them with a few friends, and publish them to their profiles. But "the number one requested feature we got was for fan page integration," he says. Those requests weren't just about marketing (though Kinsel does point to users like YouTube celebrities Michelle Phan, a beauty tips expert, and Mystery Guitar Man -- a mysterious shades-wearing guitar player -- as examples of people using Docs.com to communicate with fans and promote their online presence). Fan page owners also wanted the ability to edit documents as a group, Kinsel says.

But what's interesting to Kinsel -- and this goes back to the photo-sharing comparison -- is the way the whole culture around documents can change when document authoring and sharing tools are embedded in a very large online community. (Facebook is expected to cross the 500-million-member mark sometime this summer.) "Something we talk a lot about in the lab is this virtuous cycle of creation and consumption," Kinsel says. "That's a mouthful of a term, but it's basically this concept that there are products out there, Facebook being the prime example, where each additional piece of content that's created begets another piece of content."

On Facebook, for example, every time a member "Likes" a piece of content, that fact shows up on their wall or news feed, with a link back to the original thing they liked, be it a page, a photo, a video, or a document. That, in turn, can inspire their friends to click on the link, and Like it themselves. And on and on.

To put it all in the simplest terms: If you're a company built around authoring programs and other software for personal computing, but computer users are spending more and more of their time in social environments like Facebook, you'd better understand how people want to use documents in social settings. That's the raison d'etre for FUSE Labs, really -- which makes Docs.com a bellwether project at Microsoft.

Kinsel's own description of Docs.com's significance for the company is worth quoting at length: "We actually believe that Microsoft, in many ways, is already a leader in social computing. It's just happening mostly in the enterprise. There are huge investments in the company already, over many years, to enable social functionality on products like SharePoint and Office 2010. As a lab, we really are focused on two key ways of influencing the company. Number one is looking at what experience does the company already have in these enterprise social scenarios that we can learn from and potentially extend to the consumer space. And vice versa -- what is happening in the consumer space that we can bring back into Office and our other core products. This Docs.com project is really a combination of both."

If Docs.com took off and wound up being the model for other projects inside Microsoft, "it would be a fantastic thing," Kinsel says. He says that FUSE Labs and Docs.com "already has the attention of some key executives" -- presumably including chief software architect Ray Ozzie, who first announced the lab's creation last fall. And there's already a plan to extend Docs.com's features further, including a major "back to school" update this coming fall.

In the end, it's Facebook, not FUSE Labs, that is the real laboratory in this scenario. "Really understanding the Facebook community themselves, and how they interact and how they want to interact in the context of documents, is really valuable to figure out, so that companywide we can figure out the right strategy going forward," says Kinsel. "We believe that the concept of 'social' is reinventing all sorts of applications, and potentially the software industry as a whole. As evidenced by what the company has done in a lot of our new enterprise products, we support that completely, and we think we are in a real position to execute."

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Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can email him at [email protected], call him at 415-796-3024, or follow him on Twitter at twitter.com/wroush.