Google's purchase of Writely is the beginning of the end for Microsoft Office, if you believe some people. That probably only means chest-beating blather is back, with the software-as-a-service revolutionaries replacing the egomaniacal dot-com pushers of 1998, but it's a very interesting deal nonetheless.

I first heard of Writely in November last year when Salesforce.com chief executive Marc Benioff named the product in a dig at Microsoft's Office Live. " Companies like Writely, Num Sum, Zimbra, and Goffice are breaking Microsoft's hypnotic trance," he wrote in a "memo to staff" that, as so frequently happens, ended up in the media.

None of these names meant anything to me so I Googled them and found Zimbra to be a collaboration suite, Num Sum a spreadsheet, and Goffice a suite of word processor, spreadsheet and publishing tools – all of them residing online rather than on a PC's hard disk. Most interesting of all was Writely.

With Writely, you get an online wysiwyg word processor with built-in storage. You can save to a range of formats including Word, PDF, OpenDocument Format, and HTML. Best of all, the documents are fully sharable so they become ad hoc collaborative knowledge management centres.

There's a lot to be said for working online. The files can be downloaded to your desktop but keeping them on the web means that they are accessible anywhere by anyone you want to be able to access them.

With connectivity becoming widely available, more stable and faster, some of the arguments against online apps are melting away. The use of Ajax tools in site designs is also making these programs richer and more dynamic. And many of them are priced between free and next to nothing.

However, there are a few caveats to the argument that Microsoft Office should be consigned to history. The internet is still not ubiquitous; and working on flights and in wireless cold spots is a problem. Writely lets you save files to the desktop but obviously the collaborative element is lost. Also, on a slow link, working the web can be a molasses-wading experience.

Third and most importantly, Office is a great product, replete with usability aids and chock-full of features. It may be fat, expensive and Microsoft's, but as the slow progress of OpenOffice suggests, it's still the gold standard.

You don't need an MBA to see what Google is after with the Writely deal – Office has been the crown jewels of Microsoft's empire for over a decade. But Writely will have cost little more than the lint from Google's voluminous pockets and Microsoft Office is a mature, powerful suite.

Software residing online is chipping away at the client-server paradigm but there's a long way to go. On news of the purchase, Salesforce's Benioff suggested the buy was "Google's most important and strategic acquisition. It demonstrates that on-demand [software] is the death knell of Microsoft. Google is firing a shot directly into the heart of Microsoft Office."

That might be wishful thinking but it's clear that even the desktop will not be safe from the changing face of software.