I started using Google Docs a couple of years ago, and quickly it became my number one place to keep the documents that previously came everywhere with me in my pocket on a USB drive. However, after a few experiences where I urgently needed to access a document while my internet connection was down, I revised my approach and reverted to the USB stick.
However, this week I noticed that Google have announced offline access for Google Docs, provided you install Google Gears. And while the user interface is still nowhere near the standard of Microsoft Word, it is steadily improving, and for most documents I write is more than sufficient. If they were to create a Flash or Silverlight interface, they could potentially come up with a serious rival to Word.
And what have Microsoft been doing all this time? Well sadly, they are lagging behind. When Live Mesh eventually shows up, we will be able to access our Word documents from all the computers we use, which is great. But you will still need Office installed on those PCs.
And then there is Office Live Workspace which already offers a decent amount of online storage for Office documents, but as far as I can tell, has no offline support, and again you absolutely must have Office installed to edit the documents. There doesn't even seem to be an easy way of printing either. So for now Google Docs is definitely in the lead for those documents that don't need advanced formatting and layout features (which is most of my personal documents).
Now understandably, Microsoft may be reluctant to give a free version of Word away in the browser. But what if Microsoft allowed us to associate a licensed copy of Office with a Windows Live ID? That way they could give access to a basic set of in-browser editor features (say using Silverlight) to allow editing and printing of documents from anywhere on the web. They could even let us use up one of the three licenses you get with Office Home and Student edition to ensure they get a revenue stream from this. If they don't come up with a good way of working on documents in the browser before too long, they could end up losing a lot of ground to Google, just like IE has done to FireFox.
And one last thing ... why doesn't Office Live Workspace allow a OneNote notebook to be created in the cloud? That would be awesome.