Google has declared an 'all out war' against the cash cow of Redmond [read Microsoft Office] by acquiring Writely and then merging it with Google Docs & Spreadsheets. Now Microsoft is also planning to release an online version of Microsoft Word and Excel based on Microsoft Works Suite.

Closer home, Zoho is innovating even faster. They have launched a complete suite of online Office applications that are more sophisticated and feature-rich that competing Google products. And Zoho Office suite includes tools for presentation, project management and a visual database, which are still missing in Google Office.

Most corporates would never ever consider putting their confidential Word documents or Spreadsheets on external servers (no matter how secure they are) and this could hurt the growth or usage of online office applications in the corporate world. So Zoho has a good chance of winning here since corporates can deploy and host Zoho Office suite inside their protected environments - the data will remain safe since it would reside on the company's own servers.

Google and Microsoft plan to monetize their Online Office applications via contextual advertising but Zoho is likely to maintain an ad-free policy. Instead, Zoho plans to make money from organizations who buy site licenses for deploying Zoho products inside their corporate intranets.

While I am not a very big fan of Online Office programs because they work inside "buggy browsers" which are prone to crash for no reason, I still use these apps quite often especially when I am working on a computer without Microsoft Office or when I have to share a document with different people.

For me, a perfect app would be one that can automatically sync the offline and online version of the document. Say I make an edit to the online copy of my Sales report, now when I open the old and outdated copy of the sales report residing on my local computer, the program should prompt me to merge the new changes from the online version. Once I am done editing, the offline changes should be propogated to the online copy.

It now seems that Microsoft is thinking on similar lines which will make it standout from the rest of the Office race.

According to Antoine Leblond (corporate vice president of Office Productivity Applications), Microsoft is focusing on online services designed to integrate with Office, a strategy hoping to find the best of both worlds. "The future of software is going to be the combination of client applications [like Office] and [online] services"

Leblond also mentioned that Google will find it increasingly difficult to add new features to online software because its programs rely so heavily on the limitations of Internet browsers.

Now that's an intelligent strategy and could make the going tough for Google unless the search engine decides to offer an destkop version of their Word Processor and Spreadsheet software. Who knows if OpenOffice or Corel Wordperfect land up in Google's stable to counter Microsoft's winning plan.