Like two super-heavyweights cautiously circling each other, Microsoft ( MSFT) and Google ( GOOG) have both been grabbing the headlines recently as they try to land that killer punch. First, Google sent shockwaves through the tech sector with its Chrome OS, an operating system that's challenging Microsoft in the low-end PC market. Clearly unwilling to get trapped in a corner, Microsoft launched its counterattack Monday, adding more flesh to the bones of its online services strategy. The Redmond, Wash.-based firm previewed its Office 2010 software Monday at its Worldwide Partner Conference and also announced plans to provide Office applications for free to Windows Live users. Designed to deliver Word, PowerPoint and Excel as Web services , this strategy is a clear move onto Google's turf, but also could significantly boost Microsoft's cloud computing efforts.
Cloud services, which offer compute power and storage via the Internet, are fast becoming one of the tech sector's hottest technologies, thanks in no small part to the IT spending slowdown. Companies like IBM ( IBM), Microsoft and Amazon ( AMZN) are pushing cloud services as a way for firms to avoid the upfront costs of hardware and software. However, cloud computing is still in its relative infancy. Stymied by vendor in-fighting and businesses' reluctance to relinquish control of key applications and data, the technology is nowhere near widespread adoption. Microsoft's decision to provide Office as an online service may nonetheless provide a major boost to the cloud agenda, according to Roger Kay, president of analyst firm Endpoint Technologies Associates.