Just in! Exciting news courtesy of Andreas Ramos' Google Adwords User Group:
Yep. Google Office.
Google will partner with SUN to deliver a complete suite of software to compete against Microsoft Office. This will include a word processor, spreadsheet, etc. It will be based on SUN's OpenOffice, which is open source.
If you've tried NetOffice, it's a Microsoft Office clone. It works just like Microsoft. And it works with Microsoft files. You can replace Microsoft Office ($600 or so) entirely with OpenOffice, which is free.
This was announced an hour ago (NOTE from CK: approx. 11 am PST) in a joint press conf at Google by Scott McNealy (CEO of SUN) and Eric Schmidt (quasi-CEO of Google).
This is a declaration of war between Google and Microsoft. MS Office is Microsoft's cash cow. By releasing G-Office, Google will undermine MS's revenues.