Microsoft is due to release online versions of its major applications, Word, Excel and PowerPoint, as well as the less widely used OneNote, with the next version of Office. It's unclear at this stage whether it will offer these for free or on a subscription basis, but there are several free online offerings, so it may be tricky to get the subs in, particularly for personal use.
The Google Docs suite and Adobe's Buzzword - admittedly only a word processor...so far - are both free, so it may be that personal and student versions of the Microsoft Office Web Applications end up ad-funded. This is one of the ways Office Live is currently paid for, but the other is subscription, and Microsoft has already said business customers will receive the products as a ‘hosted subscription service'.
So far, we've only seen the applications as screenshots, but they look very like simplified versions of the office 2007 apps, which is what you might expect. Simplified ribbons, with a lot of the icons missing, but with enough of the regularly used functions present to make them adequate for the majority of simple document creation.
If the Office Web Applications do turn out to be free for personal use then they, in collaboration with Office Live Workspace and your own website, represent exceptional value from a company that is often maligned as being in it only for the money. You have to wonder if this isn't a sweetener to get you hooked, though, given the company's stated desire to move to a subscription-based model for software sales. But while it's free, it's a very good deal indeed.