In keeping with its pledge to continually update its core products, Microsoft this morning unveiled a major update to its free Office Web Apps, which provide surprisingly functional versions of Word, Excel, PowerPoint and OneNote on the web. With this new update, Office Web Apps now offers real-time coauthoring functionality across the apps.

I spoke with Microsoft's Amanda Lefebvre about this and other new updates to the Office Web Apps last week, and she told me at the time that co-authoring was part of a new push to mature this free solution. (Office Web Apps is available for free to any users of Outlook.com, SkyDrive, Office 365 Home Premium, or, via SharePoint Online, any business versions of Office 365.)

"When we launched Office Web Apps in 2010, we position them as a companion to the desktop Office experience," Lefebver said. "But this year, especially, we've made inroads in improving the functionality. Our intention is to shift Office Web Apps to a real, standalone Office experience on the web."

To that end, the real-time co-authoring features in Office Web Apps significantly improve on the previous functionality, which Microsoft calls "same time" co-authoring. Before this update, users could work on the same Office document simultaneously, but they wouldn't see the other users' changes until they saved the document.

So real-time co-authoring works as you might expect. The various Web Apps provide a menu in the top right that lists each author currently working on the document. And you can see a colored flag indicating each user in the document. As they edit, the changes appear immediately.

Two authors editing in real time in a Word document in Word Web App

Less obvious is that the Office Web Apps are losing the Save button. (OneNote never had this feature, so in a sense the auto-save functionality from OneNote is now coming to the other Web Apps.) Instead, Office documents are saved on the fly as you edit.

What's missing, unfortunately, is any sense of versioning: There's no track changes functionality in the Office Web Apps—yet—so you'll still need to use the desktop applications for that kind of use. (That said, track changes information is saved within Office documents, so you can of course "round trip" them between the desktop and the web and not lose that information.)

You can now edit headers and footers in Word Web App

And this functionality works across all Office Web Apps implementations, for both consumers and businesses. There's no different in the experience across each. (Indeed, the different Office Web Apps implementations are all served from the same cloud data center now, a situation that changed with the last OWA update.)

Real-time co-authoring isn't all that's new with Office Web Apps. According to Microsoft, the following changes were also made in this latest update:

Word Web App. The web-based Word version gains the ability to add and edit headers and footers, and add page numbers and place them where you want. The table functionality has been greatly expanded with more pre-set themes and better formatting possibilities. You can now use Find and Replace, as in the desktop application, and you can insert page breaks.

Find and replace in Word Web App

Excel Web App. The web-based version of Excel now lets you protect (work)sheets (in addition to the Freeze Panes addition from the June upate), and it provides status bar-based aggregates like SUM, AVERAGE, and COUNT right there in the bottom of the window. You can reorder sheets, drag and drop cells, and rename workbooks.

Status bar aggregates

PowerPoint Web App. The web-based version of PowerPoint now supports new picture cropping functionality and presentation renaming while editing the presentation.

Microsoft notes that full Android tablet support for the Office Web Apps is still on track for this year, too, so more is on the way. But it's interesting to watch this web-based solution—so often forgotten by tech bloggers who are perhaps a bit overly-excited by less functional web solutions like Google Docs or Apple iWork—develop into a truly useful and full-feature suite. Anyone who thinks Office is too expensive hasn't been paying attention.