“Four Office Applications will be on the web” according to to Abel Avram reporting for InfoQ. They will be Word, Excel, PowerPoint and OneNote and they will run inside the Browser. Whether this is a reaction to Google’s Chrome O/S announcement or an extension to the general, slow, development of Windows Live, is unclear. What’s interesting is that they will be free, will use native web browser technologies (HTML, CSS and JavaScript) rather than Silverlight and will presumably compete directly in the space currently occupied by Google and Zoho docs.
The original Microsoft Press release is here.