It's certainly another example of the new business model for Web 2.0 start-ups: 1- Hire a few Ruby and Ajax developers; 2- Come up with a web-based application that mimics one of Microsoft's Office products; 3- Make your beta version free to as many users as possible; 4 - Get acquired by Google, et al.
Not that there's anything wrong with that, as Rob Hof points out.
There's still a long way to go for any real competition to MS Office, but Writely is probably the most advanced web-based app to come along so far, and Microsoft is right to be worried. Otherwise, the Redmond giant would never have decided to make Office 2007 with Open Standards, nor created Microsoft Live.
