Google’s intersection with office-productivity suites is likely to stimulate innovation.
For example, I’ve blogged a fair bit recently about annotation. Google has a mechanism for annotation in Google Notebook, as does Microsoft Word. GAFYD will allow annotations to be recontextualized for the Web-enabled office. In fairness, and to avoid the Google vs. Microsoft double standard, I expect all of this will also apply to Microsoft Office Live.
It’ll be interesting to watch this unfold.