Mary Jo Foley has a blog post about how Microsoft's Office Live Workspace service will be leaving beta by the end of the year. She does a good job, as always, of putting this in context. But I'd like to offer up a few comments, not so much in disagreement of anything, but more in along the lines of a virtual conversation. For example:

Microsoft’s goal is to release the final version of Office Live Workspace — the product Microsoft has that is most comparable to Google Docs — in 2008.

So let's be clear here. Office Live Workspace is not a Google Docs competitor at all. (Foley discusses this later in the article. But I think the headline and that previous quoted sentence confuse thing a bit.) If anything, any comparison of Office Live Workspace and Google Docs is really a very specific comparison about the differences between the two companies' approaches to online services. That is...

Office Live Workspace is a "Software + Services" solution. You do not create or edit documents in the cloud. Instead, you use the much more feature-packed Microsoft Office desktop software to do that, and you use Office Live Workspace as a cloud-based companion service for Office. This is, as Foley says later, the way users "really want to work." I agree with that, though I think more and more people will move to a cloud-based model over time. In other words, this is the way most users really want to work ... right now.

Google Docs is a pure cloud computing service. There is no client interaction at all, and everything--document creation, editing, whatever--happens in the cloud. You can use Google Docs from any Web browser on just about any device, but primarily on PCs.

Microsoft officials continue to cite this usage pattern in explaining why the company hasn’t released a Webified version of Office. Do users really want to create large text files, spreadsheets and presentations “on the Web” as opposed to on their PCs? Microsoft says no — and I feel the same. As I’ve said before, I think users are choosing Google Docs more because they feel Office is overpriced than because they want to create documents in the cloud.

I think it might be a bit more nuanced than that.

If price were the only issue, people would use OpenOffice.org or SmartSuite. But they're not. In fact, the best-selling Office version now is the Home and Student version, which is typically sold for just $125, sometimes less.

I think what's really happening is that most computer users are still using traditional desktop software because a) it's what they know, b) it's still on their PCs, and c) it's much more functional. Actually, a fourth reason might be connectivity: Even though many of us have pervasive broadband connections, many of us do not. And that type of thing needs to be ubiquitous before cloud computing becomes the mainstream computing model.

One more thought: The fact that anyone is using something as lame as Google Docs should be a wake-up call for Microsoft. This isn't exactly a full-featured productivity suite. In fact, it's a glorified text editor, the type of thing students create as their final project in a Visual Basic 101 class. But people are using it. What happens when it gets decent? What happens when it really does offer the 10 percent of Office than 99 percent of users really need?

What happens when it works offline? All Google needs to do is make an "installer" and then things get interesting.

It's going to happen. And if Microsoft isn't working on a Web-based version of Office, they don't get it.