Microsoft Corp. will introduce a cloud version of its Office applications this week, a move that ramps up the software giant's competition not only with companies such as Google Inc. and VMware Inc. but with itself.

On Tuesday, Microsoft Chief Executive Steve Ballmer is scheduled to launch Office 365, a combination of communication, collaboration and productivity software delivered via the Internet. Microsoft, which is holding an event in New York to celebrate the debut, calls the suite of services the "next generation cloud...