The smartphone market is booming thanks to mobile devices like the iPhone and the Blackberry. As other segments of the market are in decline, the smartphone market continues to grow in part because the average smartphone offers multiple functionalities in one device.

Users of most smartphones can access the internet, check email, and view/ edit Office documents. This capability allows the smartphone to do things that required a mobile phone and a laptop not too long ago.

One of the key things that many users of the iPhone are clamoring for is something that many other smartphones already have -- the ability to edit documents from Microsoft Office. EWeek reports that Microsoft's Stephen Elop, President of Microsoft Business Division, hinted at the Web 2.0 conference that an Office application for the iPhone might be in the works.

Office document editing capability is one of the things that Elop says Microsoft recognizes as a demand from the smartphone market. Tim O'Reilly asked Elop directly if that means the software giant is working on a version of Office for the iPhone. Elop replied, "Not yet—keep watching."

Elop did get into detail about the ad-supported version of Office that Microsoft will offer on the Web. He says that Microsoft is still working on the web-based Office application and that it has to be very careful that the web-based application has the same interface and functionality that users are used to with the locally installed Office versions.

Elop says with over 500 million global Office users extra care has to be taken to ensure that an online version of Office doesn’t fundamentally change anything in the interface. He also says that Microsoft isn’t looking to introduce an application to counter any supposed threat offered by Google Docs. Rather, Microsoft is looking to release an application with innovation and value that enterprise users would be willing to use and pay for.

As for the time frame Microsoft envisions for the ad-supported online Office version, Elop simply says that the release of even a beta offering "won’t be in this calendar year."