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We’ve been hearing reports today that Microsoft’s Office 365 service — which includes new online versions of Exchange, SharePoint and other Office products — has been down for about two hours. Several readers have told us that they are unable to send email because of the outage.

A Twitter message posted about an hour ago by the company indicated that it is investigating “service issues.” In a separate Tweet on the @MSCloudUS account, the company wrote:

We apologize for the inconvenience that the #office365 outage has caused today. We’re are working on resolving the issue

The issue appears to be tied to “connectivity issues” at a North American data center, the company said.

If you are an Office 365 user, let us know what you are experiencing. At least one Seattle venture capitalist who uses the service wasn’t impressed. In a Tweet, Madrona’s Scott Jacobson wrote:

“nail in the coffin for our @office365 test; service down for 2+ hours with no useful updates or ETA; #microsoft #fail #notacloudcompany.”

Microsoft, which is an intense battle with Google and its online applications, can’t afford to lose customers when it comes to these core business products. Office 365 costs $6 per month for small businesses and professionals.

UPDATE: As of 3 p.m. Wednesday, Microsoft said that connectivity is being restored and that “full service will be available soon.”

And here’s a statement on the outage from Steven Gerri, General Manager, Global Foundation Services at Microsoft.

“At approximately 11:30am PDT, Microsoft became aware of a networking issue affecting customers of some Microsoft services hosted out of one of our North American data centers. We worked to isolate the issue and we are beginning to see service restoration. We continue to investigate the root cause of this issue.”

Previously on GeekWire: Office 365: Microsoft makes pitch for businesses to stop futzing around with servers

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