Google acquired word processing and spreadsheet technology from other companies. They then integrated these apps into a suite. Recently the suite has been rewritten to focus on collaboration functionality. The collaboration works in real time. Two people can work on the same document at the same time. The changes are merged instantaneously.
The entire application suite is called Google Apps. The key apps for word processing, spreadsheets, and presentation is called Google Docs. The new versions ensure that Microsoft Word documents keep their formatting when opened in Google’s app. The Google spreadsheet functionality does not have all the features of Microsoft Excel. Power users are expected to stick with Excel. This might be the pattern of the future. Power users keep Microsoft Office.
One drawback with the new versions from Google is that you must be connected to the net for them to run. There are reportedly 25 million Google app accounts out there. The costs are $50 per year for each user. Microsoft will need to provide an online option in Office 2010 to stay relevant.