Microsoft is starting to take a run at Google Docs. They have started by offering, at least, while it is in Beta release, a free Microsoft Office Live Workspace. This is simply 500Mb of web space on a server that you can use to upload your documents, and access them from anywhere with a browser. You also share these documents with others. Microsoft has a plug in that integrates with Office on your desktop, and supposedly makes for a smoother integration of Office with Workspace. There is a small catch in that it only works with browsers that support ActiveX, that is Internet Explorer and Firefox currently.
The really interesting news is that Microsoft has announced web applications that will be "lightweight" versions of Word, Excel, PowerPoint and OneNote accessed from a browser. No word yet whether they will be free, or whether you'll have to have the desktop version of Office running to use it.
Rest assured, Microsoft will figure out some angle to make this a revenue producer. Microsoft is pulling out its old tried and true strategy of coming out with a "me too" so-so product that mimics Google Docs, and will constantly update the product until it gets 5 star reviews. This will be followed by raising the price dramatically. Office is not cheap, and people, for some reason, are still paying for it, even though OpenOffice.org for the desktop, and Google Docs for the Internet are available for free.