Microsoft is rising to the challenge of Google Docs, offering free Office applications on the web as it releases Office 2010. New paid versions of the ubiquitous office suite will be available to businesses in May and consumers in June, but its Office Web Apps component is already available in beta through Microsoft Office Live.

Anyone with a Windows Live account can create, modify or share Word, Excel and PowerPoint documents for free. They do not need Microsoft software installed on their machines.

Gartner predicts web-based office suites will grow at 34 per cent annually through to 2013 to satisfy market demand. Google recently purchased DocVerse, a company that enables Microsoft applications in the cloud. It raises the question: with so many free web-based office software options available, why pay for a new version of the proprietary suite?

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