As was written today, Google rolled out -- to a very limited audience -- the new "Google Spreadsheet" web-based application. This will allow many people anywhere in the world to collaborate on spreadsheet-type activity with only the need for a web browser. No special or costly software will be required.

How did the market respond? Well, Google shares (GOOG) were up in a large way today, closing at $389.99, a positive change of $15.55 per share, or 4.15%. One big perceived announcement to compete with a flagship Microsoft product and the market pumps up Google in a large way, eh?

What will this "eating away at Microsoft" mindset that Google has cause for ole' Softie? There will be plenty of time to tell in the future, but for now, Google's challenge will be to actually convince customers that there is a web-based (and *free*) alternative to the basic functionality of the Excel spreadsheet program included in the Microsoft Office suite. There are several advanced uses of Excel that, of course, will not be threatened by Google Spreadsheet, but for basic spreadsheet tasks with a need for global collaboration and centralized control, Google Spreadsheet may make a decent challenger.

Can Google market its products -- including Google Spreadsheet -- correctly in order to take marketshare from Microsoft? As the OpenOffice folks have found out, this is a challenge. OpenOffice is a very slick and integrated full-office competitor to Microsoft Office -- and it's free -- but it really hasn't dented revenues from Microsoft Office in a big way -- yet. Google will have the same challenge.

[Disclosure: I own MSFT shares as of 6-6-06]