The battle between two IT giants seems to have entered into the cloud computing space as well. Last week, Google launched Cloud Connect and hit Microsoft right where it hurts – its Office portfolio. With the Cloud Connect plug-in, users can now go on the cloud with their Office files, without having to fire up SharePoint, another Microsoft product. With this single product, Office users get access to simultaneous collaboration, revision history, cloud sync, unique URLs and simple sharing of Office files ( Word, Excel and PowerPoint).

Google Cloud Connect for Microsoft Office automatically syncs your Office documents between your desktop and Google Docs’ cloud storage, allowing you to seamlessly collaborate with other Google users and back up all your Office files.

A user who wishes to share the files using Cloud Connect plug-in just needs to upload these files into the cloud. And the people, with whom he shares, don’t require Office to view or edit the documents – they can open them in Google docs.

It seems to be a long term strategy from Google. Though, it may not excite Google in terms of revenue but it definitely gives a chance to the users to have a closer look at the Google Apps. And eventually move them away from Office.

Microsoft hasn’t taken kindly to this move by Google to hit its biggest revenue stream. In a statement, it said that this move merely highlighted Office’s popularity, but Google’s products fall far short in functionality. Microsoft hit back hard saying that users of Google Connect stood to lose out on security, functionality, and possibly, data integrity.

“Although it’s flattering that Google is acknowledging customer demand for Office, we’re not sure Google’s heart is in the productivity business,” Microsoft said. “Their revenue and market share have been minuscule after four years of trying, and services like Cloud Connect appear to be more targeted at getting your data onto their servers, than helping you get things done.”

This is not the first time Google and Microsoft have crossed swords in the cloud computing arena. In January earlier this year Google had won an injunction against Microsoft in a case involving a coveted government contract for cloud computing services.

Looks like the war is going to continue…