This is the first in a series of occasional commentaries on the future of corporate IT.

In the wake of the popular embrace of the buzzword Web 2.0, the suffix “2.0” has become an all-purpose signifier of putatively revolutionary newness. It’s hard to pin down exactly what it means to be 2.0 – which is one of the suffix’s main attractions – but the term seems to denote a software program or a software-based service that has two qualities: (1) it is delivered over the internet rather than installed on local machines, and (2) it facilitates the collaborative creation of some sort of product. To get any more specific than that is probably unnecessary and almost definitely futile.

For businesses, one of the more intriguing of the recent coinages is “Office 2.0.” That term is being used, with increasing frequency (and, naturally, decreasing specificity), to describe a new generation of personal productivity applications – the would-be successors to the component applications of the ubiquitous Microsoft Office. Office 2.0 applications are delivered as services over the internet, running in most cases within the user’s web browser. Many such “web apps” are already available, ranging from Google’s Writely word processor to Dan Bricklin’s wikiCalc spreadsheet program to Zoho’s Show presentation creator. They are, by design and necessity, much simpler than traditional “desktop apps,” and because they run on the internet they are in many ways (though not in all ways) more conducive to collaboration among many users. They are also, in general, easier to integrate with other popular Web 2.0 formats and tools such as tags, wikis and blogs.

Because of the centrality to the white-collar world of Microsoft Office, which has expanded to encompass email and calendar programs as well as various other components, a major shift in the nature of personal productivity applications would have far-reaching implications for companies and their IT vendors. So it’s worth taking a hard look at the state of the Office market and its likely evolution. First, though, it’s necessary to debunk “Office 2.0.” Though not without a few important grains of truth, the term is misleading, a red herring in effect if not intent. First, by suggesting that we’re now seeing the first generational shift in personal productivity applications (PPAs), it oversimplifies the history of office software, obscuring past developments that can help illuminate the future. Second, it jumps the gun. We’re still a generation away from the adoption of purely web-based PPAs.

If I had to summarize the generations of office software, here’s how I’d do it:

Office 1.0 (1980s): a set of discrete and often incompatible applications for word processing, spreadsheets, presentation creation, and simple database management. Archetype: Lotus 1-2-3.

Office 2.0 (1990 – present): integrated suites of PPAs, with expanded, if still limited, collaboration capabilities. Archetype: Microsoft Office.

Office 3.0 (present – early 2010s): hybrid desktop/web suites incorporating internet-based tools and interfaces to facilitate collaboration and web publishing.

Office 4.0 (c. early 2010s): fully web-based suites.

It’s been widely assumed, among the tech-forward Web 2.0 crowd, that it will be the end users who will drive the adoption of purely web-based office apps – and that corporate IT departments will be the obstructionists. I think it will actually play out in the opposite way.

Whatever the flaws of Microsoft Office, most end users are comfortable with it – and they have little motivation to overturn the apple cart. What is absolutely unacceptable to them is to take a step backward in functionality – which is exactly what would be required to make the leap to web PPAs today. Web apps not only disappear when you lose an internet connection, they are also less responsive for many common tasks, don’t handle existing Office files very well, have deficiencies in printing (never underestimate the importance of hard copy in business), and have fewer features (Microsoft Office of course has way too many, but – here’s the rub – different people value different ones). Moreover, many of the current web apps are standalone apps and thus represent an unwelcome retreat to the fragmented world of Office 1.0. Finally, the apps are immature and may change dramatically or even disappear tomorrow – not a strong selling point for the corporate market.

What will be attractive to end users – at least a sizable number of them – is to extend the usefulness of the traditional office suite through the addition of web-based tools and interfaces. The key is to extend both functionality and interoperability without taking away any of the capabilities that users currently rely on or expect. Reducing interoperability or functionality is a non-starter, for the end user as well as the IT departments that want to avoid annoying the end user. You screw with PowerPoint at your own risk.

What we’re entering, then, is a transitional generation for office apps, involving a desktop/web hybrid. This generation will last for a number of years, with more and more application functionality moving onto the web as network capabilities, standards, and connectivity continue to advance. At some point, and almost seamlessly, from the user’s perspective, the apps will become more or less fully web-based and we’ll have reached the era of what I call Office 4.0 (and what others currently call Office 2.0). Driving the shift will be the desire of companies, filtered through their IT staffs, to dramatically simplify their IT infrastructure. Mature web-based apps don’t require local hardware, or local installation and maintenance, or local trouble-shooting, or local upgrading – they reduce costs and increase flexibility. These considerations are largely invisible to end users, but they’re very important to companies and will become increasingly important as the IT world shifts to what might be called utility-class computing.

Those who look to “Office 2.0” to destroy the dominance of Microsoft Office are likely to be sorely disappointed. In the absence of widespread user disgruntlement, Office isn’t going anywhere – and Microsoft’s fledgling Live services have a strong natural advantage over most contenders. That doesn’t mean that everything’s going to be rosy for Microsoft. Even during this transitional period, the company is going to find it harder and harder to maintain the traditional pricing and upgrade models that have made Office such an enormously lucrative franchise. Those models have been crumbling for some time, and as PPAs steadily become more like services and less like products, they’re going to collapse altogether. The collapse will begin with small and medium-sized businesses, which have the most to gain and the least to lose from moving quickly to a software-as-a-service model, even for PPAs, and it will roll upward to larger companies from there. Microsoft sees this coming, and one of its biggest challenges in the years ahead will be figuring out how to replace the revenues and profits that get sucked out of the Office market.

As for the many Office 2.0 companies that are popping up, most are doomed. Some, though, may find nice niche markets – consumers who need to do a specific task, inveterate Microsoft haters, tech tinkerers, tiny companies and nonprofits, educators – or carve out a role, at least temporarily, as a complement to the hybrid version of Office. But don’t expect today’s Office 2.0 contenders to make meaningful inroads in the mainstream business market, at least not anytime soon.

In the near term, the software-as-a-service companies with the greatest opportunities in the enterprise market are those looking to replace applications that traditionally run on servers rather than those looking to replace applications that traditionally run on personal computers. But that’s another story.

UPDATE: The Bb Gun offers an interesting, and even more conservative, take on the subject, pointing out that it’s a mistake to assume that office apps are fundamentally about collaboration: “There are tools for collaboration and there are tools for individual contributions. You mix the two, and you’re not necessarily working to people’s expectations.” It’s a good point – there’s a reason they’re called personal productivity apps – but it’s also true that “office work” is often collaborative, in one way or another, and there’s rarely a bright line between personal and group productivity. That said, it’s a mistake to think that online collaboration is always superior to, say, emailing a file back and forth or even distributing hard copies and gathering comments. There are a lot of subtleties in – and forms of – business collaboration, and in general a successful office app will support as many of those forms as possible (or at least not get in the way of any of them) while also, of course, supporting the considerable amount of work that people do alone.