The new Google Docs & Spreadsheets service doesn't offer as many functions as Microsoft's word processor and spreadsheet programs. Rather, it's being positioned as a simple -- and free -- alternative for nonprofessional computing tasks.
Google has already rolled out a host of free online services that compete against Microsoft's software, which it licenses to businesses and sells to consumers for approximately $400. Earlier this year, Google bought Writely, a web-based word-processing service and launched its own spreadsheet product.
In June, Google released its Spreadsheets program, which requires no downloads and allows people share and edit the same documents online.
And in August, the Mountain View, Calif., company began offering organizations Google Apps for Your Domain. The package brings together e-mail, calendar, instant-messaging and web-page-creation services that run on Google's servers.
Google has repeatedly downplayed the threat its services pose to Microsoft, saying such services only fit into its goal of organizing the world's information.
Google's various services have achieved moderate success, despite their limited functionality and availability. For example, the Gmail e-mail program -- which is still available on an invitation basis only -- attracted 9.7 million U.S. visitors in September, and its Calendar service grabbed 896,000 visitors during that time frame, according to ComScore Networks.
In the fiscal year ended June 30, Microsoft's Information Worker division, which consists mainly of Office, generated $8.3 billion in operating income on $11.3 billion in sales. That makes it the company's second-largest and most profitable business behind it Windows operating system.
Microsoft's response to Google entering its territory was to launch its Office Live brand last November. Office Live does not provide web-hosted versions of Microsoft's Office products, but it does offer free services geared toward business users like an "online workspace."