With ad-supported software all the rage these days, why has Microsoft (NASDAQ: MSFT) not gone down the path of free software supported by advertisers pocketbooks instead of customer subscription payments? Microsoft's Office 2007 software package is very nice, but quite costly and there's not a lot of incentive for most people to upgrade from earlier versions to see only incremental features for their own specific use. Yet, Office 2007 is selling well (quite well), as the division responsible for selling it saw more than $1 billion more in revenue in its latest quarter from the year-ago period.

Do customers really want to take their spreadsheets, documents and other office items onto the web? Google (NASDAQ: GOOG)'s Docs & Spreadsheets think so, and it's been written about extensively here in the past. Still, customers are paying hand over fist for Microsoft's Office package, which tells the market that there are two things happening.

That famous title line was uttered by none other than former Sun CEO Scott McNealy, and it's being carried out further by current CEO Jonathan Schwartz (see his blog here). At the Office 2.0 conference this week in San Francisco, it appears that many believe the days of locally-installed Office productivity apps like Microsoft Office are coming to a close. McNealy was way ahead of his time in making that famous statement that went on to become Sun's corporate tagline, and for his part, much of that tagline is coming true these days with high-speed Internet connections everywhere.

Indeed, Microsoft is pushing hard to integrate its Office suite into "Office Live", which at some point int he future needs to probably replace that bulky retail box that comes with Microsoft Office when you buy it. So, does Microsoft see Office apps living entirely on the web as well? In some form, I think it does.

There will, however, always be a need to have a locally-installed Office productivity suite installed on millions of computers, unless Internet access is ubiquitous as the air we all breathe. I'm not sure about you, but there are times when, gasp, I actually do not have Internet access, but still need to get work done. There's a major scratch.

Are we close to "Web 2.0" of everything you use on a daily basis being "webified"? That will eventually happen, but as I stated above, you can't just port every single thing to a web browser and expect the globe to start using just a web browser for everything, no matter how heavily Google Inc (NASDAQ: GOOG) thinks this is going to happen. While many millions of customers will be easily wanting to just use a web browser to get most of their work done, that backup option will always need to be there for the future, I see.

Google shares closed up to end the trading week at $409.88 after quite a rally this entire week on some high-profile share visibility along with, well, not huge product news from the Internet search leader.

After starting September 11th's trading say at $378, Google shares would have been a decent investment for just this week with a gain of over 8% just for this week. But, will the stampede continue?

One question I posed at the conclusion of this week was the propensity of GOOG shares to continue climbing all the way to $500 based on market calls but very little substance. This isn't a bad thing, and the market makers know this.

I'm more and more becoming convinced that Google's master plan is to be the largest advertising network on the planet through all mediums possible, and the strategic partnerships and deals it has made recently have shined very bright lights on that though. If and when Google makes it, perhaps its valuation of $500 per share and the accompanying market capitalization will be completely justified. Today, though, I remain unconvinced.

Some posting highlights from this past week include:

• Google shares go up and up as market makers speak loudly

• Google gets aggressive about Japanese market using the mobile space

• Although Google isn't a "portal", it's gaining visitors as the portals lose them

• Google's acquisitions since going public have been low-key but very strategic

Google has just released the first update to its Google Spreadsheets online service. It looks like there is now an "anyone can view" setting which will not require the creator of the specific Google-based spreadsheet from having to specifically name other users who have access to view a certain Google spreadsheet.

This sounds like a feature that should have debuted with the initial release, but oh well. Newer printing features include the ability to print an online Google spreadsheet while dropping empty rows and columns (much like Microsoft Excel), and there will also be an export to PDF option for those that wish to save Google spreadsheets to the world-standard Adobe PDF format.

What has Google Spreadsheets done financially for the Internet search giant? Probably nothing, and that's not the point most likely. It gets Google's name and brand even further entrenched into the media limelight and with consumers while costing the company virtually nothing except for creation and testing costs.

It's hard to imagine that Google Spreadsheets is a tax on Google's resources like its search engine and email service probably causes, but it's a great brand-builder. Google Spreadsheets seems to have not only received a nice facelift here with newer features, but again -- it's getting Google in the press at regular intervals -- and that is key.

As our site certainly reflects, everything new Google product launch seems to be associated with its ability to "kill" the competition. Putting a "G" in front of anything seems to strike fear in the hearts of investors in competitors, from eBay to Microsoft to AOL. But does Google actually succeed in slaying the knights of Yahoo! with its quiver of wildly-aimed product arrows? An analysis by BusinessWeek suggests, not so much.

Google Talk, for instance, was widely acclaimed as a fearsome challenger to MSN Messenger, AIM, and Yahoo! Messenger. But today, a little less than a year after its launch, the messaging program ranks #10 according to comScore Media Metrix. Social networking site Orkut, hugely popular at launch, is now at less than 1% share in that space (and much though I drooled for an invite, I visited the site once in the past year, although I've frequented many other social networking spots). Google Finance, Google Spreadsheets, and Google blog search have definitely not yet made their home in the "win" column.

The Google new product development process is described by Marissa Mayer as "try a bunch of ideas, refine them, and see what survives." And those that "survive" don't just live, but thrive; Google Maps is now #2 only to Mapquest, and Google News is (in my opinion) the best news search tool available, anywhere.

The big question BusinessWeek asks (and one that no one else is asking right now): does Google even know how to develop a product? The magazine says many of its new services lack "stickiness" and aren't really those that "people want to use." For a company whose product announcements are widely feared and its investors, them's fighting words. Will Google prove to be a conquistador or a schoolyard bully, great at making threats, but quivering inside for fear some competitor might actually stand its ground?

Google Spreadsheet may have just found its first big friend -- Panorama Software. The software maker has traditionally been tied to Microsoft SQL Server, but has been severing those ties recently. Perhaps it sees a shirt away from Microsoft's hosted business intelligence platforms? I don't really see that happening for Microsoft, but you never know.

Panorama will be integrating its established business intelligence offerings into Google Spreadsheet -- the first business intelligence vendor to do so, according to reports. This strikes me as kind of surprising -- Google Spreadsheet is a fairly new release and is still classified as "Beta" by Google. This is rarely a stage where a large-scale enterprise-wide integration relationship happens, but it is here. Panorama must see the future in web-based, collaborative spreadsheet use or else it would not be jumping on the Google Spreadsheet bandwagon so early in its lifetime.

Perhaps this quote from Panorama sums up its thoughts: "We recognize that the business paradigm is changing and that the business community is demanding a more accessible way to collaborate outside the firewall". Well put -- and I do agree with them that a business paradigm shift is happening, but we're just at the start, aren't we?

Google spreadsheets? That's the next salvo in the battle of Microsoft v. Google. Ever since Lotus 1-2-3 was taken down by Microsoft Excel in the mid-nineties, Microsoft has handily dominated the land of spreadsheets. Google will be introducing a new spreadsheet program tomorrow, in a limited release. The company will be accepting signups at 9 a.m. EDT tomorrow on its Google Labs web site.

Thanks to the news, GOOG recovered a bit from its $5.00 drop today in after hours trading, but Microsoft didn't seem to have an equal and opposite affect, also up a bit after a $0.26 drop.