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I mentioned in my previous post "Google Office?" that Google was working on a webbased Office suite. Well they just made the next step ...

Google launches Google Apps for Your Domain. The software bundle is aimed at small and midsize companies. The first release combines Google's E-mail, calendar, and instant messaging with Web site creation software. It will be hosted in Google's data center and branded with the customer domain name. Management tools for the IT pros included.

Later this year Writely (word processor, compatible with MS Word) and Google Spreadsheets (compatible with MS Excel) will be added to this suite.
Collaboration features, like the ones in Google Spreadsheets, will be added to all applications. Also included APIs, directory-server integration, guaranteed performance levels

That's the first step. Later this year, Google plans to add its Writely word processor and Google Spreadsheets to the suite, build online collaboration features that work across its applications, and market the whole package to large companies for a fee. Google will include IT-friendly features such as APIs, directory-server integration, guaranteed performance levels, and telephone tech support.
Source: Aaron Ricadela in InformationWeek

Although the services from Google are still patched together the applications are functional. In the article it's even called "patchwork" and "Frankenstein software". But I think that's just FUD tactic. As we have seen with the evolving of Gmail it just takes time to mature and to integrate with the other services.

Another remarkable thing mentioned in Aaron's article is that Google is "persuading" users to store more and more data online. Gmail with its 2Gb of mail storage, Picasa Web Albums the webbased photo storage and so on.

The trend for centralised online storage is something we will hear a lot about in the near future. With a couple of my colleagues we have been brainstorming about how we could facilitate this at our company for our customers but as longs as Google offers these services for free it's very hard to make a solid business case.

In the meantime we will wait what the answer will be from Microsoft.