In a long expected answer to Google Apps, the folks from Redmond demonstrated, for the first time, their new Web applications for Office, which are lightweight versions of Microsoft Office Word, Excel, PowerPoint and OneNote that are used with the browser.

Now anyone can use all of the web, phone and PC versions of Office to edit and collaborate on the same document.

'We are bringing the best of the web to Windows, and the best of Windows to the web,' said Ray Ozzie, chief software architect at Microsoft.

'From PC to the web to the phone, and from the server to cloud, we are focused on enabling the creation of the next generation of user experiences that change the way we live, work and play.'

The idea behind this innovation is to help people become more productive and enhance the desktop experience by letting people access, create, edit, share and collaborate on Office documents across multiple devices.

My company has been using Google Apps this way for almost a year and I've found it to be efficient and cost effective.

Of course Google Apps is free. I'm not so sure that Microsoft will be giving away the goods, but it says it is different.

Office Web applications will be available to individuals through Office Live and to businesses though a hosted subscription and existing licensing programmes.

This new offering will be compatible with familiar web browsers from Internet Explorer, Firefox and Safari.

It plans to release a private technical preview of Office Web applications later this year.

In the meantime, if you want to be in with a chance to participate in beta testing, sign up at Microsoft Office Live Workspace at http://www.workspace.officelive.com

But Office applications are not the only Microsoft service available 'in the cloud'.

Microsoft took the opportunity at the conference to demonstrate the new Live Services platform, which allows developers to build rich applications that could be extended to more than 400 million Windows Live users including those on Hotmail and Messenger.

The Live Services platform lets people use Windows Live, Office Live and Xbox LIVE via any PC or mobile device. Cool.

Part of making this work is Live Mesh, a service for synchronising documents, media, files and application data across multiple PCs and devices. It's now available as an open beta at http://www.mesh.com for Windows and Windows Mobile.

Now those same synchronization capabilities are available to developers through a technology preview of the Live Framework. The idea is to let Web developers extend applications to the world of Windows-based PCs offline.

Microsoft also highlighted the new Visual Studio 2008 and .NET Framework 3.5 service packs, and the forthcoming Visual Studio 2010 and .NET Framework 4 releases at the conference. These are based on the company's new cloud platform Azure.

The Azure operating system is hosted in Microsoft data centres. It offers a set of developer services for building new applications to run from the cloud or enhance existing applications with cloud-based capabilities. Now developers can build web applications, traditional software applications or hybrid solutions for both on and offline use.

Can Microsoft compete with Google in hosted applications market? I would say yes, indeed. The cloud offers huge opportunity and the enterprise end of the market is largely untried. Bigger organisations can benefit from the simplified capacity planning.

In the cloud you can use what you want, when you want it, eliminating procurement headaches.

You outsource service management tasks which cuts overheads.
And you can integrate cloud services with existing applications so there is no throwing out the baby with the bath water.

The only downside I can see is the challenge of integrating data between cloud and other assets, but there are some pretty clever middleware products to help with this.

To me it's obvious.

The cloud is the future of computing and if Microsoft can't make a go it, then who can?


>>Sherrilynne Starkie is the managing partner of Strive Public Relations, a strategic communications consultancy serving the Isle of Man. Visit her business blog, Strive Notes for frequent updates www.strivepr.com/notes or follow her on twitter.com/sherrilynne