Microsoft has yet another rival that would like to take chunks of its share in the market for productivity applications, but so far there has been scant evidence of any weakening in the giant’s dominance.

Started by Hotmail founder Sabeer Bhatia, Instacoll’s Live Documents is another web-based suite that provides users with access to word processing, spreadsheet, presentations and other tools. However, the firm claimed its approach is different in that it can also be used to web-enable Office applications such as Word, Excel and PowerPoint.

Separately, another web-focused company aiming at cracking Microsoft’s suite dominance, Zoho, announced the ability to edit documents offline using its Writer word processing application.

Microsoft is also facing challenges from the OpenOffice.org community and Google, which recently struck a deal for Capgemini to resell its Docs desktop suite.

However, although each of its rivals has supporters, there are no signs that Microsoft is losing business share on the rivalry. The firm retains about 95 per cent of revenue accrued from suites, according to research firm IDC, and Office spearheads a business division worth over $16bn in annual revenue.

“The biggest external competitor they have is these online hosted web versions and if you’re doing collaboration and a lot of document sharing, or if you need universal access [to files and programs] they’re useful,” said Matt Rosoff of research company Directions on Microsoft.

“But Microsoft is trying to counteract that with Office Live Workspace and right now we’re not seeing any real traction for rivals in businesses. The biggest overall challenge Microsoft is getting is from earlier versions of Office and getting users to upgrade.”

Rosoff also noted that Microsoft is itself adopting a strong role in on-demand software through hosted versions of Exchange and SharePoint.