Live Documents, the startup founded by Hotmail co-founder Sabeer Bhatia that said it was going to war with Microsoft with its online Office suite wasn’t kidding, with screenshots showing that the service is a nearly perfect clone of Microsoft Office.

Digital Inspiration was the first to find screenshots of the yet to be released Microsoft Office killer, and if it wasn’t for the Live Documents bar at the top of each shot you’d swear you were looking at Office 2007; soo much so that I’m at least a little bit skeptical on the scoop; I’m not saying that they are not real, but it wouldn’t be hard to mock up shots like this.

Presuming the shots are real the question then becomes whether the service is legal. Other sites have previously suggested (not in this case) that layouts can not be copyrighted, but I’m sure once Microsoft sees a complete clone of their Office package they’ll be wanting to test this theory in Court.

See our previous coverage here.

Update: as pointed out by commenter’s a full range of screenshots are now available on the Live Documents site.

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While some startups issue boastful press releases promising the world, India and Silicon Valley based Zoho is actually doing the software thing. This morning they launched full offline access for Zoho writer, based on the Google Gears open source platform.

In August the company launched partial offline functionality that let users read documents. Documents can now be edited offline as well after this most recent release. Google still does not offer offline functionality for Google Docs, although presumably it’s coming shortly.

Zoho continues to lead the pack in offering a useful online Office alternative. Competing with Google is hard enough for the big guys, but Zoho is winning ground as an independent startup. Adobe has thrown its hat in the ring with Buzzword. Microsoft continues to dither as it contemplates the half-life of its massive Office revenues.

Yahoo remains silent…but some have said they’ve at least sniffed around at acquiring Zoho. Seems like a good fit to me. A big draw of Zimbra, which Yahoo acquired this summer for $350 million, is their offline functionality. Email and Office apps go hand in hand.

Overview video is below. Zoho says offline support for their other applications will come as soon as the platform is stable.

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New product press releases unencumbered by the complexities of releasing actual software set off alarm bells. And when those press releases are so boastful as to suggest that the (unlaunched) product can hurt a competitor’s $20 billion revenue stream, the alarm bells get much louder.

So with alarm bells screaming, Hotmail co-founder Sabeer Bhatia announces he’s going to war with Microsoft by (someday) launching an online version of Office. The fact that Bhatia got rich when Microsoft bought Hotmail for $400 million in 1997 only adds additional drama to the story.

The as yet unlaunched product, called Live Documents (see our review from a year ago when the product was significantly different), will be a Flash based online suite that competes with Word, Excel and Powerpoint. The company will also release plugins that work with the desktop Office software that lets users store and collaborate on documents online.

If this sounds a bit like Google Docs and Zoho, that’s because it is. The differentiating factors for Live Documents, besides the fact that it’s built on Flash (Google Docs and Zoho are Ajax applications), is that they are promising feature matches with Office 2007 and they have the offline plugin component.

It’s not clear that Flash is a better (or worse) interface than Javascript, but it isn’t much of a competitive advantage either way. And we note that Zoho has their own plugins for the desktop Office. Zoho also has an offline version of their product via Google Gears; its likely that Google is not far behind.

CTO Sumanth Raghavendra says Live Documents “break’s Microsoft’s proprietary format lock-in.” But in reality Live Documents has absolutely nothing new to offer users based on what we’ve been told so far. And as Dan Farber notes, they aren’t yet releasing the product and don’t even have screen shots to share with us.

There are additional red flags as well. As Zoho’s Sridhar Vembu notes, Bhatia is making a big mistake by estimating Live Documents revenue based on taking market share from Microsoft. Bhatia says “If Live Documents makes 1 per cent of Microsoft Office revenues, then we would earn USD 200 million a year. If Live Documents makes 10 per cent of Microsoft Office revenues then our revenues would be USD 2 billion a year in the next three to four years.” Vembu notes Guy Kawasaki and others who’ve warned against this kind of analysis.

So far Live Documents is nothing more than bullshit and smokescreens. That may have been the way to do business when Bhatia co-founded Hotmail in 1996, but his software is going to have to survive on its own in a hyper competitive marketplace when it actually launches. Hubris alone won’t do it. We’ll see if he can pull off a second win, or if Bhatia is, in the end, just another one trick pony. So far, I’m underwhelmed.

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A new service called Live Documents allows Windows PC users with Office already installed on their computer to synchronize documents across multiple users over the Internet. The service works currently with Word and Excel documents (other office applications are coming soon, they say) via a toolbar. While in beta, the service is free.

The creator of a document sets permissions of other users (read only, read-write, print permission, etc.) and emails out the file to them as they normally would. When the other users open the document all instances of the document across all users are syncronized regularly when users are online.

This is a powerful application that addresses one of the primary benefit of wikis and online Word clones like Zoho Writer and Writely - collaboration via the Internet. The functionality from the user perspective is very similar to Microsoft Sharepoint Portal Server, which allows business users to collaborate on documents via a centralized Windows server. Unlike Sharepoint, Live Documents doesn’t store any documents on a server, and therefore doesn’t require you to have your own (very expensive) Windows server.

We’ve tested Live Documents on two PCs in our office and it worked flawlessly. We’re looking forward to a Mac version, as well as extended functionality for at least PowerPoint as well.

The next step for Live Documents should be to look for a partner amongst the online office players to make their service work across applications as well. When that happens, a Word user will be able to collaborate on a document real-time with a Zoho Writer user, for example, over the Internet.

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