There's a buzz online right now that Microsoft -- long weary of all the attention young-upstart Google is getting -- is finally getting ready to strike back with a more extensive online offering of its own. Check out CNET's blog for one good entry on this.

The CNET post quotes blogger Nick Carr, who wrote:

"The new strategy will, I'm told, lay out a roadmap of moves across three major areas: the transformation of the company's portfolio of enterprise applications to a web-services architecture, the launch of web versions of its major PC applications, and the continued expansion of its data center network. I expect that all these announcements will reflect Microsoft's focus on what it calls "software plus services" - the tying of web apps to traditional installed apps - but they nevertheless promise to mark the start of a new era for the company that has dominated the PC age."

I suspect this is right on the money, although Carr's guess that this will likely happen the week of March 3 or 10 is a longer shot. Microsoft can no longer ignore the free Google Apps offering, nor the larger cloud-computing impetus behind it. The only real question is about specifics: when will Microsoft roll out it offering, and how drastically is Redmond willing to change its business model?

That last is the critical one. Microsoft and Google come at personal productivity from the exact opposite directions. Microsoft is big-ticket Office suites, Google Apps is free; Microsoft is individual licenses, Google is come one, come all; Microsoft is local data, Google is floating cloud data; and Microsoft is every-feature-we-can-think-of, Google is barebones functionality.

But even Microsoft has to respond to overwhelming consumer interest. The mere fact that commentators are talking about "Google's challenge" or "Microsoft's response" show who is really in the driver's seat here. But as smart and as capable as Microsoft clearly is, it is hard to imagine its coming announcement will silence the critics, or even impress most users. Why? Because Microsoft still needs to make big profits from every single Office user. Its new offering may extend Office into the online, cloud-computing world, but Office is not free. Google Apps, for most users, is free, and even when those users want a little more the premium option is very cheap. Microsoft will be unable, or at least unwilling, to compete with free.

That's not to say Microsoft's offering will be a failure. Many users need advanced functionality or want the assurance of buying from a big established company and they will certainly stick with Microsoft. But one thing is certain: Microsoft's forthcoming announcement will not knock Google from the spotlight, and probably won't even slow its progress towards widespread acceptance and use.

Peter Wolchak