From Macworld:

Hotmail co-founder Sabeer Bhatia is placing his bets on an online office productivity suite that aims to compete with similar offerings from Microsoft and Google.

Instant Collaboration Software Technologies (InstaColl), a Bangalore company co-founded by Bhatia, unveiled Live Documents on Wednesday, an online service that allows users to access and edit documents using a Web browser, and collaborate and share documents with others.

Based on the review, this service looks promising. While, as of this writing, it’s not available yet (but will be offered for free for individuals and fee-based for corporate users when launched), it is poised to offer Google more competition, as well as challenge Microsoft’s off-the-shelf Office Suite (although the article says that “Even power-users of Microsoft Office can use our service”).

With the rise in use of technologies like Flash, Ajax, Flex etc. and free browser plugins to allow greater flexibility and customization, a migration away from possessing an actual package that contains your software discs — and a move towards browser-based implementation and online documentation — might be the future for software use and distribution.

This speculation raises a few interesting questions:

• How will this affect competition? Will only the companies with the largest advertising budgets prevail?
• Will the company revenue model be fee-based or rely on advertising?
• What about security: who will protect and/or have access to any document you create online and store on a server? (if you think this is a non-issue, think about all the laptops that are floating around somewhere with social security numbers or nuclear documentation on them; also, reflect on everything you’ve ever searched for that’s sitting on a disc, somewhere, right now).

If this is, in fact, the way people will use applications in the (near?) future, I’d like to see upgrades that happen behind-the-scenes, where constant re-investment in my software through purchasing the latest version becomes obsolete. In a sense, it would be like leasing the software — you pay for usage, but you don’t own a license like you do now when you buy software.

Another is that one of these services could open up to developers and a host of enhancements (widgets, browser plugins, etc.) could become the norm as far as user customization.

It seems to be becoming easier to collaborate and share documents with any member of your team — and even outside contractors (*wink*).