Google unveiled a souped-up version of Google Docs to some 400 CIOs at its Mountain View, Calif. headquarters this week.

The snappier version of its cloud-based software was revealed at a day-long event Monday, titled "Google Atmosphere 2010." Several Google executives touted how Google Docs performs faster and offers, at least for the moment, more collaborative bells and whistles than its competitors. That includes the capacity for up to 50 people to work on the same document at the same time, and a complete revamping of the underlying code.

Microsoft and IBM quickly stepped forward to downplay the search giant''s attempts to get a leg up in what promises to be a hot-and-heavy competition in coming months: the race to get corporate IT buyers to embrace "cloud computing."

Using the Internet to access nifty software programs residing on distant computer servers is nothing new. But Microsoft, IBM, Cisco and Google want corporations to use the hosted programs they supply to do more collaborative work projects in the Internet cloud. A recent Forrester survey shows 87% of corporate employees use email, while 79% use word processing and 71% use spreadsheets. But only 24% use web conferencing tools and just 20% use document-sharing web sites available to them.

"The problem is people work on teams whose members aren't in the same location, so the opportunity is to build better Web-based tools to do that distributed work," says Ted Schadler, a Forrester tech industry analyst. "This is about giving corporate employees and their business partners a way to go find the thing you're working on without having to tunnel through firewalls."

For Microsoft, IBM, Cisco and Google, wider use of cloud computing in the workplace could generate billions in subscription revenues. But the tech giants need to get corporate IT buyers to ante up for hosted services that make it easier for workers and partners to share work documents and use web-based video and audio communication systems.

Schadler says Google, for now, lacks the software resellers, legal staff and policy management expertise to deliver a complex online subscription service on a large scale to big corporations. "It's Microsoft's game to lose, but Google made a lot of improvement and today they showed that they do want to go after this business," says Schader.

Clint Patterson, a senior director in the Microsoft Business Division, says that less than a million people "are paying to use Google in the enterprise," compared to 40 million users of Microsoft's online tools. "Google is just now adding the type of functionality most people want and most businesses require," says Patterson. "It takes more than souped-up features to win businesses."

Microsoft hopes to up the ante when it rolls out Office 2010 to corporate users next month in New York City. Brimming with collaboration features designed to work with Microsoft SharePoint servers, the beta version of Office 2010 has been tried by a record 6 million users. "Large corporations are going to the cloud with Microsoft," predicts Chris Capossela, senior vice president of Microsoft Business Division. "Google has no track record in the enterprise, whereas we've earned our stripes in the enterprise."

IBM spokesman Michael Azzi pointed to recent outages of Google hosted services as evidence that the search giant has a long way to go to prove it can supply such services reliably to corporate customers. "Google is taking the same technology they've made ubiquitous for free to consumers and just put a price tag on it to sell to businesses," contends Azzi.

For its part, IBM recently integrated Salesforce.com's customer relationship management services and Skype's Internet phone service directly into LotusLive; it plans to similarly add UPS's online shipping service in coming months. "We'll do more partner solutions when it makes sense to do," says Bethann Cregg, LotusLive marketing director.

By Byron Acohido