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MS has been working on this vision for years now, its hardly as if they decided a few months ago and decided to crank out these products.
It's a bit disingenuous to say MS hasn't been focused on the cloud. They run MSN and Hotmail, as well as high-level programmable platforms like Popfly. They have 400M online users. They've also been using the hosted version of Office to demo it to prospective buyers in the US for some time now.
Perhaps a more accurate statement is that they haven't exposed the development platform to true development. Until now, it's been a tightly controlled set of tools, rather than one in which you can roll your own stuff.
I find it fascinating that Microsoft, whose early focus on developers as the driving force gave them desktop dominance, has only now reached out to those developers with an on-demand platform.
Put another way: Google wants to make everyone a hacker; Microsoft wants to make everyone a sysadmin; Apple wants to make everyone a media mogul. And their cloud strategies reflect this. Only Amazon, so far, wants to make everyone a developer.
Therefor, I think by giving users additional options for using their existing Office installation will only further solidify Office dominance and continue to give users just enough reason not to switch. So I see it hurting Google far more than it could ever hurt MSFT.
Microsoft realizes this, and I think that's why having an online presence to compete with Google Docs will hurt Google far more than cannibalize any Office sales.
Also I think the other major point so many tech bloggers seem to forget is that MS moves with the curve, not ahead... no matter how much people have been banging on about moving to the 'cloud', it's really only now that mainstream businesses and users are actually interested...