Microsoft entered the world of cloud-based programs last week with the official launch of its Office Web Apps, which was created to compete head-on with the popular Google Docs application.

Google Docs has become increasingly popular over the last few years with both individuals and businesses that are looking for free Web-based alternatives to desktop software programs, either as a money-saving tool or as a way to improve document collaboration. Microsoft’s foray into this area will pose a serious challenge to Google’s dominance of this field.

Each program has its strengths and weaknesses—Office Web Apps is better at maintaining the layout of a document, whereas Google Docs reportedly still wins in terms of document collaboration. However, the Office Web-based product is still in early stages, and it will be easier, and less costly, for them to make enhancements to an online product.

Some businesses have started using free Web-based products for their entry-level employees, or for staff that doesn’t need to use Office-type programs in their day-to-day job. The cost savings can be great, but sharing documents internally can sometimes be a challenge. We’ll be interested to watch this trend to see if it continues as cloud computing becomes more popular.

Does your business use Google Docs? Do you plan to use Microsoft Web Apps in your business? How do you currently use/plan to use these and similar Web-based programs? Share your thoughts with us by posting a comment.