Short and Sweet: Microsoft’s Office Online (“Web Office”) will be offered for free to individuals within Facebook (either as platform or a Facebook app). A paid “Web Office” package will be available for small businesses. The paid version will be within a collaborative framework much like an extranet. This fee-based package will essentially be a hybrid of a Facebook group and a public profile (“fan page”).

More Details: There are developments that need to precede this evolution:

• FB Groups will need extra functionality like applications, super admin, auto friend list(of colleagues).
• Alternatively, “public profiles” will need privacy and membership options.

Facebook needs to pay more attention to its individual users before adding more business tools.  Lately, Facebook has been adding increased functionality for businesses, but not adding much for the individuals. Facebook must balance this out or risk alienating individuals.

Facebook users are already spending an immense amount of time on the site (increasingly for business).  Facebook is a mature, proven, and currently unmatched social network platform. Facebook’s popularity and Zuckerberg’s genius are formidable opponents to Google.  The increasing potential for Facebook to unleash it’s new display ad platform (more speculation on my part) across the immense number of Facebook Connect(ed) sites with ads that outperform Adwords is a major threat to Google.

Thundering through Google’s product development cycle are: Wave, the new OS, and Voice. All of these are “game changers” in their own right.

With both Microsoft and Facebook being Google competitors (and with Microsoft’s ~2% ownership of Facebook), a collaborative project to erode Google share will be incredibly appealing and add tidal waves of motion to an already fluid medium.