With great fanfare the other day, Microsoft announced two new web-based services, Windows Live and Office Live. The initial hype made it sound as if the company was going to make Office and parts of Windows available for free over the Web.

That’s not the case, however. Office Live doesn’t really have much to do with Office, and Windows Live doesn’t have much to do with Windows. Office Live will be a set of free services for small businesses, such as Web hosting, email, and collaboration tools. And Windows Live is in essence a personalized home page, much like Yahoo and Google now offer.

The announcement came only a day or two after CNet reported that Google was hiring programmers to improve OpenOffice.org, the Open Source alternative to Microsoft Office. This spells bad news for Microsoft. If Google can use techniques such as AJAX to create a free, Web-based alternative to Office, I think you’d see plenty of people balk at paying the high prices Microsoft charges for Office.

By themselves, Windows Live and Office Live aren’t enough to fend off Google. It appears both are very worthy services and are great ideas. But if Google can really find a way to offer OpenOffice.org for free over the Web, Microsoft will have to come up with something else to fight the search giant.

What do you think of Windows Live and Office Live?