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You can see Microsoft Word above, so let's take a quick look at the other online apps below.
Microsoft Excel Online

Microsoft PowerPoint Online

Microsoft OneNote Online

Too Little Too Late?
My guess is that Microsoft still has plenty of time to lure users to the new Office Web Applications, as they're being called. Despite its popularity, Google Docs still doesn't exactly compete with Microsoft Office, if only because many users still aren't ready to make the full move to the web. The advantage that Microsoft has is that their offering doesn't require users to change anything. Online availability will be there as an option so your docs are available online if you need them—but it's not your only option. So while Microsoft took its sweet time, I think Office online has plenty of potential for engaging new users.
For more, be sure to check out the video interview and quick demo at MSDN. Let's hear what you think about the move—including whether or not you think you'll adopt the new tech—in the comments.
Microsoft Office Comes to the Browser (Finally) [ReadWriteWeb]