“A Web Office Suite is a combination of productivity, publishing and collaboration features. A Web Office both embraces the functionality of desktop office suites (e.g. Microsoft Office) and extends it by using Web Native features.” —Richard MacManus, ReadWriteWeb

“A web office is a set of applications hosted on a server that enable users to create, edit and share information. The data resides on a web server, and is a move towards cloud computing.” full entry
We define Web Office as “a set of browser-based productivity tools for knowledge workers”.
Elements of a Web Office suite typically include tools like a word processor, a spreadsheet, a presentation editor, an email client, a simple database...they also have an organizer for your documents or more likely a wiki to organize your team or company's documents.
One of the key concepts of Web Office applications is that each document has its own web address, which is always the same, even if the document changes. Most Web Office suites have a track changes feature, so that you can tell who made what changes and when. This powerful feature alone makes collaborating on documents much simpler and more productive.
Your data is saved “in the cloud”, either on the Web Office company's servers or on a server managed by your IT department. In either case your data is always backed up and immune from viruses and hacking attempts (Web Office suites use the same technology your bank uses for online access).
Web Office tools work in the browser, you download the application along with the document. You don't have to worry about different operating systems or product versions. And since you get the application each time, you get new software updates and bug fixes automatically. This also means that you can do your work from any computer equipped with a web browser and an internet connection.
Forget email attachments. Just send a link, and your colleagues will be able to access the document and the tools to edit it themselves. Most Web Office tools allow you to set rules on what people can do to a document (read only, add comments, edit and so forth). Some tools even let people collaborate on documents in real-time, via chat or by seeing each other's edits as they happen.
A lot of smart people are betting that Web Office is the way we'll work on the future. Learn more from Google, Adobe, Microsoft, Yahoo and other small but leading players such as Atlassian, 37Signals, Zoho and Thinkfree.
No offline access: obviously you want access to your data when you are offline. This problem is going away soon, both because people are more and more "always connected" and because the big players mentioned above are working on online/offline synchronization technologies, such as Adobe AIR, Google Gears and Mozilla Prism. — I expect this problem to be solved by the end of 2008.
Privacy Concerns: a lot of people, especially corporations, are not comfortable with hosting their private data on someone else's computers. This is a legitimate concern, and Google and others are working hard to convince people that their servers are as secure as their laptops, if not more. We'll see what happens. In the meantime, smart companies like Atlassian sell Web Office software that you can run on your own servers, behind the firewall.
Lack of features: when it comes to productivity applications, nothing beats Microsoft Office. It has a 20 year history and every feature you could possibly imagine. Web Office applications do not have nearly as many features, and some people might find them limiting. On the other hand, most people only use 10% of Office, and find the Microsoft suite to be too complex. Because of this, most Web Office suites try to satisfy 80% of office users with 20% of the features. Some do better than others, compare the very simple Google Docs to the much praised Adobe Buzzword, for instance. — The bottom line is that Web Office suites are easy to use and getting better every day.
Browser Compatibility Issues: because of the current technology state of the art, it's hard to create Web Office applications that work well in every browser and every operating system. This results in some users having to switch browser in order to use a productivity tool, which is a bit annoying. — I expect this problem to go away as Web Office suites mature and modern web standards are adopted.
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