I don't have any major need for spreadsheets, so I'm definitely not inclined to buy some software for it. But there are a few little things for which I could use one and that is why it's great to see a free web application from Google that provides it.
I started to use Google Spreadsheets yesterday and found it very convenient and simple to use. It offers some basic functionality for now but that's ok since it's only a limited test. It can import and export XLS and CSV files at the moment, so I converted my few files from a simple text format into CSV and they were smoothly imported. The application looks quite slick. This is the first application from Google that looks a lot like a desktop application. It has menus near the top with similar items as a standard desktop application. There are buttons for the usual suspects; Cut, Copy, Paste, Undo and Redo. It has collaborative features to let multiple users edit the same file and provides a chat interface too. I haven't tried that yet. I'm looking forward to more such applications. I'm guessing that I'll use some of them while others I won't, picking and choosing depending on usage, usability and desktop alternative availability.
And now for the idle speculation part, which kinda builds on what I first read a long time ago. This new product makes me wonder that with the known and unknown components below their web applications, Google probably has a development platform for hosting applications on their infrastructure. I wonder if they would make it available to developers too. Let's call it the environment for Google Developers, or eGoD ;-). They could potentially let eGoD applications reside on the developer's own hardware, but they can't really fulfill their "mission to organize the world's information and make it universally accessible and useful" if it's not on their own infrastructure*. A reason for developers to let Google host their eGoD applications may be to guarantee good performance by utilizing a large scale distributed system that is managed and maintained by Google. Another reason would be that all eGoD applications would be "local" to each other and to Google services so if they wish to exchange information, they would be able to do so very efficiently. I've read time and again that infrastructure is one of Google's main strengths and I think that is absolutely true.
A Google branded word processor based on Writely will surely come out soon. I don't know if these applications are the beginning of a challenge to Microsoft Office, at least not until the technologies and interfaces are more mature. However they demonstrate the capability of this imaginary eGoD platform. Such a development and hosting environment is bound to be disruptive in the desktop application ecosphere. Google may go after a big slice of the pie with Office, leaving the niche products to the small developers. Just like Microsoft did with their platform, Windows.