Girouard said his company's products were not replacements for Excel or Word, which he admits are more powerful.
But he added that for smaller businesses and for certain groups of employees within larger companies, Google Apps could be a substitute for Microsoft's products.
Microsoft has taken steps to embrace the trend toward Internet services with products like Office Live, a package of functions to help small businesses set up Web sites.
"We have a bunch of hosted services that we offer to our customers," said Chris Capossela, vice president for Office at Microsoft. "Our belief is that the future of computing is a combination of software and services."
Capossela said he welcomed the competition. But he said he expected that many customers would continue to want to have their data stored in-house because of security, legal and compliance reasons.
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