Powerpoint was programmed at a when people would actually print presentations. Who wants that? You want to share them online so people can actually use them.

Microsoft is in the difficult position where it has to take existing technology and product expectation created in the pre-internet era into our always online times. Google is free of such heavy baggage - a great advantage!

Now, that said. As the CIO for a mid sized corporation, I could NOT justify using the online office applications as they stand. Even using them in a more secured ASP environment where our companies data was secured on it’s own server with secure access allowed only to our company. Even if the applications were as feature rich and robust as desktop apps (MS Office, OpenOffice, etc.) because of potential issues, many of which have been mentioned already.
1) Hackers. While most real hackers aren’t going to try and steal the data, that’s mostly script kiddies and computer criminals, not programmers and technology explorers, and there is a distinction despite what the media spouts, there is a very real chance that proprietary data could be lost much easier than them getting through our network security.
2) The need for compatibility with the documents from outside companies. If we need to send a spreadsheet or document to another company or they send us one, how is that to be accomplished if we don’t have a compatible desktop app? How reliable would such tasks be with an online tool?
3) Up time (Server side): What does my company do if Google’s App server goes down? We can’t NOT have access to our office suites. Especially company wide.
4) Up Time (Office Side): What happens if one of more of the the offices lose their internet connection? Again, we can’t NOT have access to our office suites.
5) Remote/Travelling users: What happens when remote users don’t have a connection? They can’t work?
6) What happens if google eventually pulls the plug on the whole thing? All the documents, spreadsheets, presentations, etc. that are in their format could be totally lost if there isn’t enough time given to recover them. And if you do have time, how do you recover them? To what format? At what cost?

These are some major concerns for real world business use. I think the idea could pan out very nicely with some more work and some contractual guarantees. But the above concerns would need to be covered. We will also need to see a continued growth in wireless internet connectivity world-wide so that there is always access, unless an offline version of each app is provided as well.

Why would a CIO risk his position by putting assets on Google servers when they can keep it all behind their firewall on their own (ever cheaper) hardware? If Google goes for cost — fewer features for cheap — MS can just trim their fat margins a bit to keep their customer base.