It’s going to hurt Microsoft’s profits. Productivity software has transformed 
from a must-have big purchase to a service that needs to mesh perfectly with 
the cloud (including simultaneous collaboration). If they didn’t make Office 
free with the Surface there wouldn’t have been any selling point to the thing, 
and with Google and Apple making their (not as powerful but good enough for 
most people) productivity software free Microsoft had to do something. 

Microsoft Office Web Apps get real-time co-editing, similar to Google Drive
http://www.engadget.com/2013/11/07/microsoft-office-web-apps-updated-with-real-time-co-editing/?ncid=rss_truncated

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