By now, you’ve heard Microsoft Office 2010 will include web versions of the Office apps.  Some speculated that Monday’s announcement by Microsoft was what led Google to upstage them with the ChromeOS announcement.  But did ChromeOS really upstage Microsoft, and what will be the impact of a thin client MS Office?

Having been a General in the Office Wars of the 80’s and early 90’s, I can tell you it is about to get ugly for the upstarts and their Webby Office Wannabes.  Zoho, Google Apps, et al have not yet achieved sufficient traction to be anywhere near critical mass players.  They’re not even as far along as the long line of players (including my own Borland with Quattro Pro) that Microsoft dispatched the first time around.  Guys, fair warning: this is the kind of down and dirty competitive fighting that Microsoft does extremely well.  Your days are numbered or at least your growth is capped unless you can find a way around the Redmond Horde, and a lot of folks have tried before you with a lot of resources in the form of dollars and IQ points.

Microsoft will be fighting from their competitive strength.  They own the Office market.  Wannabes have so far failed to even match Office functionality, have many serious incompatibilities (leading to adoption barriers), and have failed to introduce much in the way of innovations short of running in a browser.  Microsoft will shortly eliminate that point of differentiation and at the same time they’ll be adding a whole raft of juicy looking new functionality.  You already weren’t caught up to them on functionality and the bar is about to go higher.  This feature war game is something Microsoft can play all day long, holding your heads underwater until you’re just tired of it.  Even if you one up them on some apps, they have a whole suite and the power of inertia.  Whatever you build, they will deliver their own version of it very shortly thereafter.  It’s an arms race where they bury you much the way Reagan did the old Soviet Union.

The best news is that it’s all good for customers.  It’s all good for us.  At least for as long as it lasts.

This is Microsoft as we haven’t seen them in years.  They are only at their best when they get their backs against the wall.  Bing showed up after years and years of failure against Google and even Yahoo.  Now we’re getting Office 2010.  Real new functionality of interest has been lacking for an extremely long time.  Office 2010 is blowing out all sorts of cool stuff: it runs in a browser, lots of new visual coolness (take that Apple!), and lots of new collaborative functions.  Heck even Scoble is excited.  As he points out, those that declared MS Office dead four years ago turn out to have been very wrong.

So keep it up competitors.  This is good stuff.  You bring out the best in Microsoft.  We know you’re likely to fall on your swords (or theirs) doing it, but it is a valuable service.  Complacent monopolies are a bad thing.  And guess what?  You do have a chance in the war.  It ain’t over and the fat lady hasn’t sung.  But you had sure better get your acts together in a hurry because the sleeping grizzly bear is wide awake and she’s pissed you’re in her territory.