Google Inc. last week announced a limited test release of Google Spreadsheets, a set of hosted tools designed to let users create, store and share basic spreadsheets on the Web. The software joins a collection of products, mostly from much smaller vendors, that are being offered as alternatives to Office's components.

However, using Google's technology to process contract proposals and other corporate documents will be "a stretch, at least in the next several years," said Melissa Webster, an analyst at IDC in Framingham, Mass. She added that Google has yet to create a full software-as-a-service business model. For example, Webster said, it "doesn't have any protections in place for enterprise data [and] doesn't have guarantees of service."

Virgin Entertainment Group Inc., a Los Angeles-based music retailer, would seem to be a good candidate for inexpensive, hosted desktop applications like Google Spreadsheets. The retail industry's profit margins are notoriously thin, and most of Virgin Entertainment's employees need only sporadic access to Office.

But the fit really isn't that good at this point, said Robert Fort, IT director at the Virgin Group Ltd. subsidiary. Fort said he isn't convinced that a Web-based hosted service would be safe enough to meet his security and regulatory compliance needs. Also, the difference in the total cost of ownership between Office and the products offered by Google and other vendors isn't clear, he said.

Fort added that he thinks he can hold the line on software licensing and support fees by installing Office on only one computer at each of Virgin's 17 stores. He also noted that Excel is an integrated component of Virgin's data warehouse and business intelligence system. Any hosted Office alternative would need to support the same capabilities that Excel offers in areas such as calculations and graphing, Fort said.