In the past, Microsoft executives have said they aren’t too concerned that users will abandon paid versions of Office in favor of free ones, saying that many Office users are already using either pirated or shared copies. The assumption is that the web-based versions will be ad-supported, like Microsoft’s other Windows Live products, but the company isn’t confirming that yet.

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It’s also likely that many users will also want to purchase desktop versions of Office since Microsoft is describing the web applications as “lightweight.” It’s not exactly clear what capabilities will be missing, however. Microsoft is only saying that the products will be particularly useful for online collaboration and that users will be able to access them from their mobile phones. They will also feature the traditional desktop Office user interface.

The consensus is that Microsoft will have an immediate advantage over Google (as well as other players including Adobe) when it introduces the new web-based version next year since the desktop-based version of Office is already so ubiquitous and widely adopted by businesses. Some business customers, who have been hesitant to move all their applications to another company’s servers, will also likely find appealing the option of hosting the applications on their own servers.

Google, of course, is not staying still. Just last week, it removed the “beta” label off of Google Apps saying it wanted to to eliminate “doubt that Apps is a mature product suite.”