Good, But Not Too Good - Microsoft Seeks Sweet Spot With Docs.com

Microsoft announced new features today to Docs.com, a Facebook-integrated Web app in closed beta that lets users create multi-author Word docs, Excel spreadsheets and PowerPoint presentations for free.

The new features themselves are not earth-shattering, but they show how the team behind Docs.com continues to improve and innovate. The question is, how far will Microsoft go to make Docs.com better before the free service starts to undermine its flagship Office products?

Docs.com is part of Microsoft's response to Google Docs, the Web app that revolutionized collaborative editing and introduced people to the idea of letting documents live in the cloud, for free.

Microsoft Office Home and Business 2010, which includes Word, Excel, PowerPoint, outlook and OneNote, costs $279.99 - which seems staggering in the age of so many free Web-based productivity tools.

Microsoft seems to be hoping that Docs.com will convert free users into paid users of Microsoft Office. The company never misses a chance to mention that Docs.com is "built on Microsoft Office 2010" and has "full compatibility with Microsoft Office:"

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