Microsoft Responds to Google Apps with Office Live Workspace:
There's a memorable scene in Crocodile Dundee where a would-be mugger pulls a switchblade on the hero Mick and his girlfriend Sue:

Sue: Mick, give him your wallet.
Mick: What for?
Sue: He's got a knife.
Mick: [chuckling] That's not a knife.
Mick: [draws a large Bowie knife]
Mick: That's a knife.
A similar scene is playing itself out between Google, Microsoft, and the Web 2.0 pundits:

Pundits: Microsoft, give Google your users.
Microsoft: What for?
Pundits: They've got an Internet-enabled office suite.
Microsoft: [chuckling] That's not an Internet-enabled office suite.
Microsoft: [pulls out Office and Office Live Workspace]
Microsoft: That's an Internet-enabled office suite.