Microsoft’s Office suite is the undisputed ruler of desktop software, but with Google moving in on Web-based office applications, Microsoft was sure to follow. Microsoft may offer basic versions of its word processing and spreadsheet software which will be supported by advertising.
Microsoft is pondering making its Works software available online, but is also careful not to cannibalize its sales of Office as it is one of the software giant’s leading sources of revenue. Microsoft may opt to offer its online software with a subscription-based model.
Alan Yates of Microsoft said to Reuters that the company will consider many options to woo entry-level users. "We're also thinking about how we might take advantage of new business models like advertising and other payment models, as well as new forms of distribution," said Yates.
Obviously, Microsoft’s strength is its experience and maturity of its office software. Google’s Writely is quite bare when compared with Word's feature set, but where Google easily surpasses Microsoft is in collaboration features. Users of Writely are able to make revisions and share documents amongst each other, whereas Word users still have to send files back and forth. Microsoft plans to address this limitation in its Office Live software, but then again, it won’t be free.
As far as OpenOffice goes: I have tried it out and found it severely lacking. I have yet to get a document to open in OpenOffice and not get corrupted. I spent 2 hours trying to clean up my resume after OpenOffice screwed it up.