Nick Carr has a blog post entitled Eric Schmidt's tough talk where he writes

Google CEO Eric Schmidt has been coy in discussing his company's ambition to create an online alternative to Microsoft Office. Just a few days ago, at the Web 2.0 Summit, Schmidt "played the semantic game" in discussing office suites, reported Dan Farber. Schmidt claimed "that Google is developing applications for just 'casual' use. 'We don’t call it an office suite. It's not targeted at the [Microsoft] Office – we never made that claim.'"

But a very different, and much more aggressive, Eric Schmidt appears in the Economist's new "World in 2007" issue. Schmidt contributes an article titled "Don't bet against the Internet," in which he makes a striking prediction. Next year, he writes, "we’ll witness the increasing dominance of open internet standards." These standards "will sweep aside the proprietary protocols promoted by individual companies striving for technical monopoly. Today’s desktop software will be overtaken by internet-based services that enable users to choose the document formats, search tools and editing capability that best suit their needs."

It's refreshing to see Google stop playing coy and be straightforward about their ambitions. At the Web 2.0 conference last year, Sergey Brin was coy about their plans when questioned by John Battelle. Given Google's significant market valuation they need to be making a lot more money than they are doing now to satisfy the markets. What better than targeting a multi-billion dollar business of a fierce competitor which is ripe for disruption? 

Now that their ambitions have been laid bare, I really hope this changes Microsoft's Office Live strategy. A lot  of  people expected Office Live to be a hosted version of Microsoft's Office suite. It is clear there is a pent up demand to bring office applications in the Web era, however it is unclear whether the simplistic division of desktop versus web applications is the right way to view this evolution. I believe the truth is that there is a continouom in which these applications should live and some applications sit better on the desktop end (e.g. word processing) while others sit better on the Web end (e.g. email reading). Ray Ozzie has said similar things in his speech at a recent Microsoft Financial Analyst Meeting.

First a revamped UI for Microsoft Office and now Google jumping into the Web Office game with both feet? 2007 is going to be an interesting year for Office productivity software.