Om was right. Get ready for an Ad-Supported document writer. Google has purchased Writely, an online Word Processor. The only challenge is to convince users that the Google Writely documents stored on G:Drive are safe from Feds.

At the moment, while still available to existing users, Writely has been closed to new signups as it moves over to the Google server infrastructure.

While Google is actively engaged in grabbing share of MS Office (Redmond's cash cow), Microsoft in turn has been investing heavily to improve its search technology, hoping to lure traffic away from Google.

Google Office vs Microsoft Office
Microsoft Office Standard 2007, priced at $399, includes Word, Excel, Powerpoint and Outlook. Google Office 2006 needs a spreadsheet and a presentation program for completing it's office suite.

So who will Google acquire next ? While there are many online versions of Excel spreadsheet alternatives like NumSum, ZohoSheet, JotSpot Tracker, iRows or wikiCalc, only Thumbstacks comes close to providing Powerpoint capabilities on the web.

Ofcourse, Microsoft Office has a huge user base but Google can emerge as a winner in the long run since

1. Google Office will remain free (supported by contextual meaningful ads),

2. Microsoft Frontpage is no more. Google HTML editor (GooglePages) is out.

3. Google file hosting service in the form of GDrive are nearing release. Microsoft doesn't have one yet.

4. Microsoft Office has tons of features but most use only 2% of Office. Google Office programs will certainly address that 2% features and more.

Writely developers define Writely like a caterpillar that matures into a beautiful butterfly at Google!

Scoble looks happy since Writely is developed using .NET - Breaks the universal myth that you can only get acquired if you DON'T use Microsoft tools.

Russell Beattie calls this deal a Web 2.0 lottery and sees a ray of hope for other web-WYSIWYG editors as another round for deals with AOL, MSN or Yahoo! will have begun today.

Phil Sim writes that Writely has little scope for generating significant revenues for revenue. No financial details out yet but Nik Cubrilovic says that Google paid much less than $5m. Photo Credit: Om