Last month Google acquired JotSpot, a wiki that understands rich document types including spreadsheets. On the other side of the online/offline chasm, Microsoft has just finished work on its Office 2007 suite.

Google’s work to build up a complete online productivity suite seems more significant than yet another release of Office, but there is little sign yet of the new displacing the old.

It is helpful to distinguish between online storage and online applications. Storing documents online solves many problems, such as that of getting access from anywhere. The case for online applications, which are usually browser-based, is more fragile.

When out and about, most of us use our own laptops to write up our meeting reports rather than going to an internet café. Furthermore, although web-based office applications such as Google Spreadsheets or Google’s Writely online word processor are remarkably capable, they fall far short of traditional desktop programs in performance and features. They also fail to let you work while disconnected. So most of us are not yet ready or willing to abandon desktop programs.

Online applications from Google and others have real advantages when collaboration or the desire to mash up data from diverse sources is more important than productivity. But to my mind the Web 2.0 movers and shakers have put too much effort into pure online applications instead of those that combine the advantages of the online and offline worlds. But neither does Microsoft have all the right answers.

Office 2007 is at the other extreme from Google, offering great collaboration features, but mainly in the context of a Windows-based intranet in which every participant keeps in step with the latest Microsoft release and with the hardware that they need to run it satisfactorily.

Surprisingly, Microsoft makes an application that strikes a sweeter balance between the richness of local applications and the reach of the internet: Windows Live Writer. This free application, now in beta, lets you compose blog posts offline then post them to the internet with one click. It works with various blog engines and includes simple but useful image manipulation tools that would be impossible to replicate in JavaScript. Its output respects internet standards and works well cross-platform. The overall user experience is much better than that of browser-based editors.

Live Writer is only a small utility but nicely illustrates how offline and online applications can combine to create an excellent hybrid – where the cloud and the desktop come together.