There is more pressure than ever on Microsoft’s cash cow, Office. As bandwidth grows, interoperability improves, and work habits change, Microsoft will be under increased pressure either to improve its offering or lower its price (or both). The former will be much harder to achieve—and still it may not be enough.

Here are a few of the competitors in the emerging landscape:

• Thanks to Salesforce.com, business software as a service is getting a lot easier to deploy.
• Google, as usual, is mounting a serious challenge to Microsoft. Here’s how their online Google Apps office suite is being resold to corporations through consulting firm Capgemini. One component of the Google Pack is Sun’s StarOffice.
• Don’t forget IBM’s plan to offer free programs for word processing, spreadsheets and presentations with its Lotus Symphony.
• And for all these new Mac owners- Apple iWork and Microsoft Office work together, for the most part.

To address this increased competition, Microsoft is releasing its next version of Office as a web service—turn it on or off by the month. Is it enough to stop the market share erosion? No.

Microsoft is going to have to come up with something groundbreaking.