Competitors Google and Zoho push services as Microsoft launches online offering.
Google and Zoho have gone on the offensive as Microsoft gets set to launch Office 2010, the next edition of the software firm's office applications suite that includes online versions of Word, Excel, PowerPoint and One Note.
The addition of Office Web Apps (OWA) strengthens Microsoft's position against the Google Apps and Zoho suites, which until now had something of a stranglehold on the online apps market.
A recent survey by Forrester of 115 US and European enterprises found that Google Premier Apps is supported by four per cent of organisations, while Zoho is supported by three per cent.
Microsoft Office 2007, meanwhile, is supported by 81 per cent of organisations, a figure that could grow with the addition of OWA.
Matthew Glotzbach, enterprise product management director at Google, encouraged Microsoft Office users to switch to Google Apps in a blog post today.
"If you're considering upgrading Office with Office, we'd encourage you to consider an alternative: upgrading Office with Google Docs," he said.
"If you choose this path, 'upgrade' means what it's supposed to mean: effortless, affordable and delivering a remarkable increase in employee productivity."
Glotzbach made the case for Google Apps by comparing the cost of the suite with Microsoft Office.
Google Apps will cost a business $50 (£33) per user per year, while OWA is available only to business customers that use SharePoint and are using volume licensed editions of the Office 2010 Office Standard and Office Professional.
Glotzbach also boasted of the document sharing capabilities in Google Apps, although Microsoft OWA now supports collaborative editing in Excel and OneNote, so his argument goes slightly awry.
Finally Glotzbach latched on to recent Forrester research which found that the majority of businesses would consider provisioning complementary applications alongside Microsoft Office, while only a small minority would think about replacing Microsoft Office with alternative offerings.
"Of course, you probably already own Office 2003 or 2007, and there's no need to uninstall them. Fortunately, Google Docs also makes Office 2003 and 2007 better," he said.
Google Apps users will be able to store Microsoft Office documents in the cloud in their original format, he said. Google has also promised to deliver real-time collaboration in Office 2003 and 2007 in the next few months.
Meanwhile, a Zoho blog post attempts to weaken the Microsoft offering by portraying it as outdated.
Zoho product evangelist Raju Vegesna claimed that alternatives to Microsoft Office, such as Google Apps and Zoho, offer integration with other useful online services, and that Microsoft Office is less sophisticated in this area.
"Office suites have traditionally been standalone applications that are independent from other business applications," he said.
"While there is clearly value in this, we think that their use and their impact on users' productivity will be significantly higher when they are contextually integrated within other business applications and workflow.
"Our team has been at work for months now componentising our Office apps and making them easy to integrate. As Microsoft begins its journey into the online office space, we pave the way to the next phase of Office apps evolution."
V3.co.uk has a full review of Office 2010 h ere.