On the assumption that not everyone reads comments, I wanted to post a comment here that was made in response to my earlier post on Live Documents. Net net: Live Documents is much more interesting than I had originally supposed. In fact, I just registered for an account. Here's why.
Is Live Documents simply a competitor to Microsoft Word? No:[W]e offer the entire Office suite - online equivalents of Word, Excel and PowerPoint - and not just Word as you have mentioned. If it was only Word then yes, many of your points on create vs. collaborate are true but it is far more complex when your data is in a spreadsheet or presentation.
What about the limitations inherent in being a pureplay SaaS/browser-based model?...[W]hen we say that we are an "online" Office suite, we are not limiting ourselves to just a browser-centric experience. While we do offer a browser-based service that offers functionality equivalent to Word, Excel and PowerPoint, we also offer a client application that makes your existing version of Microsoft Office web-enabled.