New products from those companies are cheaper, delivered as a service, more collaborative, or more open than Microsoft's Office apps--in some cases, all of the above. Sounds promising until you realize what they're up against: IDC puts Office's market share at around 95%. "They've been the only option for so long, culturally it's hard to make a switch," says Bethann Pepoli, deputy CIO for the Commonwealth of Massachusetts. The state was an early advocate of the Open Document Format--an alternative to Microsoft's OpenXML--yet 90% of state employees still use Office.

Google added a free, collaborative presentations application to its Google Docs online productivity suite. Yahoo bought Zimbra, developer of an Ajax-based collaboration suite, for $350 million.

IBM launched a free, downloadable personal productivity application suite, called Symphony, for Windows and Linux--and eventually for Mac OS X--that includes a word processor, spreadsheet, and presentation software. The tools also are available as part of Lotus Notes 8. Symphony, however, isn't available online, nor does it leverage Notes' collaboration features, though Douglas Heintzman, director of strategy for IBM's collaboration technologies, hints that could come later.

Symphony puts more weight behind OpenOffice and the Open Document Format, of which IBM has been one of the biggest supporters. An updated version of OpenOffice was released last week, too. Free productivity suites have been touted for years as an alternative to Office, with little success, despite the backing of IBM, Sun Microsystems, and others.

Microsoft Office, in contrast, is a cash cow, with more than 71 million licenses sold in fiscal 2007. Microsoft last week issued a service pack for Office 2003 (the third since the product's release) and provided a preview of the upcoming Office for Mac 2008. Microsoft's OpenXML document formats recently failed in a first round of voting at the International Organization for Standardization, but the company remains publicly confident that once it addresses issues raised during the vote, OpenXML will become a standard in the next round of voting early next year.