Still, as the pieces come together, there's little doubt that Google is quietly providing Web-based versions of the Office applications upon which Microsoft has built an empire.
"It does represent by Google a step onto Microsoft territory and yet another reason for Microsoft to try to cut off Google's ad-driven air supply," said Rob Helm, director of research at the analyst firm Directions on Microsoft.
Microsoft, meanwhile, is revamping its business to focus on Web services under the Windows Live and Office Live names, and retooling its advertising technology to target Google's bread-and-butter ad market.
"If you use this (Google's products) you may not have to use all the Microsoft products. Google has put together pieces of a whole suite," he said. "They are rudimentary tools. They're not going to immediately cause people to replace things, but for some people who don't want to pay for software and don't need to pay for extended features, this will be very attractive."
Advanced users will want to stay away from Google Spreadsheets because of its more limited features, other analysts agreed.
"Google has no clue about what enterprises want or need. Any success they have (with Google Spreadsheets) will come in the consumer market first and then be dragged into the enterprise that way," said Gartner analyst David Smith. "The real power-users are not going to be giving up their Excel spreadsheets anytime soon."
JupiterResearch analyst Michael Gartenberg questioned Google's strategy and said Microsoft shouldn't be worried.
"It's hard to imagine how either of these things (Spreadsheets or Writely) is strategic to their business. They have nothing to do with Google's core business of search," he said. "And it's hard to imagine how either one would have an impact on Microsoft or Office. There have been free alternatives to Office for years, and none have gained traction."
Microsoft does not have a hosted or Web-based version of Excel yet, but third parties already provide the online sharing capability that Google is touting with its Spreadsheets, said Microsoft.
"This is just an imitation of functionality that many other vendors already deliver, such as SimDesk, Wikicalc, and Salesforce.com," Alan Yates, general manager of Microsoft's information product-management group, said in an e-mail. "The reality is, customers are more demanding...about what they expect from their spreadsheet programs, and more than 400 million people around the world have chosen Microsoft Office because they benefit from our focus on helping them be more productive."
Helm, of Directions on Microsoft, agreed. "Google Spreadsheets is most plausibly an adjunct to Excel," he said. "If you have a spreadsheet you need to share, a service like this might make sense."
Google Spreadsheets will allow people to import Excel and other spreadsheet-type documents and export data to them, just like Intuit's QuickBase structured-data platform does. Meanwhile, Intuit will probably enable import and export compatibility with Google Spreadsheets, said Jana Eggers, general manager of Intuit's QuickBase division.
Google's next step?
Google has declined to lay out a full picture of its hosted productivity application strategy, and a Google representative said the company was not ready to discuss its plans for Writely and its strategy behind Google Spreadsheets. "Google Spreadsheets is not part of a suite of hosted productivity apps," the representative wrote in an e-mail. "Rather, it is a limited test that launched on Google Labs."
Many observers expect Google to use these applications to appeal to business customers, as Microsoft has done with Windows and Office.
Susquehanna Financial Group analyst Marianne Wolk said Google appears close to offering small businesses a suite for managing and storing files online. But the company still has to build its credibility with enterprise customers, analysts said.
"Clearly, Google could offer business customers free storage as an incentive to use its Web applications, but real demand is unlikely, in our view, until Google demonstrates strong security," Wolk wrote in a research note.
Directions on Microsoft's Helm said: "The next step is not the Google equivalent of PowerPoint, but a Web conferencing system. They already have voice and instant messaging. The next logical step would be the ability to work with presentations over the Web."
Whether or not big companies embrace Google Spreadsheets, enterprises are part of Google's long-term plans, said Forrester Research analyst Kyle McNabb. "The longer-term strategy at Google, I believe, is to let consumers influence the behavior of enterprises. They're starting to articulate a scheme around enterprises now."
Increasingly, consumers are affecting the buying decisions in corporations. And Web technology, from wikis to hosted applications, is being adopted inside businesses.
Google can use the attention it has among consumers to make inroads into the corporate world, McNabb said.
Right now, businesses are unlikely to uninstall Microsoft Office in favor of hosted applications, said Gartner analyst Michael Silver. The right combination of attributes could make a "Web office" more appealing over the next few years, he said.
"The value proposition of Web-based applications is that they are almost as compatible (as existing applications), almost as functional, at some point, and they're really easy to manage," Silver said.
"The question is, when do we see a breaking point (for) when it's acceptable?" he said.
Office incumbent Microsoft, meanwhile, is developing Office Live, part of a companywide effort to make money from advertising and online services.
Rather than an online Web edition of Excel or Word, Office Live is designed to complement an on-premise installation of Office.
Office Live services, still in beta testing, offer Web hosting, e-mail and Web collaboration to small businesses.
Because of its vast distribution network of retail outlets and PC manufacturers, Microsoft has a significant advantage over any Office challenger.
Google has, however, signed a distribution deal with Dell to pre-install Web and desktop search software on the PC maker's computers--something Google could expand over time with new offerings, McNabb noted.
"If Google does extremely well in the consumer market, IT managers will be hard-pressed to say 'Why shouldn't we?'" McNabb said. "That's the strategy that gives them an advantage over a lot of IT vendors."
"They have the advantage of having consumers' attention and they can use that in the enterprise," McNabb said.
Although it may appear an arcane matter, Google's choice of AJAX as its development strategy could play a significant role in its Excel compatibility, said Jonathan Crow, director of marketing at ThinkFree.
ThinkFree has written an offline desktop productivity suite using Java because that allows the company to provide strong compatibility with Microsoft Office formats, he said.
The company is also writing an online edition of its applications with AJAX, which will be less functional than the online version.
Google has been in the vanguard of AJAX usage. Its applications, including Google Maps and Gmail, helped set the bar for interactivity and features for Web applications.