The future of Word and Excel

There's a battle going on for where the future of Office applications is headed (spreadsheets, word processing).

Microsoft has invested huge amounts of money into the new Office 2007 suite. The main change is an overhaul in the user interface (see an overview of the new UI). The changes look great for someone new to wordprocessing, but for someone who already knows how to do everything in the current version of word, rather than buying the new Office 2007 suite, they might instead choose to use the free OpenOffice suite (which has a similar interface to Office 2003).

But Google seems to have other ideas... Writely (a browser-based word-processor) has been recently released as a beta by Google (they bought it around 6 months ago). Try it out and see what you think... you can save as word, pdf, share your documents etc., all for free. Of course you can't use VBA or other more advanced features, but for writing a normal document it gets the job done well. For collaborating on a document with others, it's unbelievably good!

What about Excel? A few months ago, Google also released Google Spreadsheets...

So the battle seems to be between online, browser based applications (that are free), vs the new Office 2007 series with a great new UI... Which do you think will win? Or is there a place for both?