Google is by no means a traditional software company. Not in the sense of the word defining Microsoft. The fact of the matter is that Microsoft co-founder Bill Gates started building the world's largest software company in a time when not even the concept of a software company existed. Google managed to successfully diverge from the traditional line, coming up with a new web-based business model. But this does not mean that the two giants are not stepping on each other's territory.

With MSN and the Windows Live suite of products and services, Microsoft is gunning after the Mountain View search giant. And at the same time Google is stepping on the Redmond company's desktop toes with its online collection of programs. Ultimately, it will all come down to Software as Service vs. Software plus Service. And for the time being, the desktop is here to stay.

And yet neither Microsoft nor Google are willing to admit that they are on a collision course. The Mountain View company has adopted the perspective that it is not a classic software company, and as such it offers only indirect competition to Microsoft's products. And while the Google Docs & Spreadsheets are in the position of the underdog going against Office (not just the Office 2007 System), Microsoft enjoys quite an advantage over the Mountain View company as it dominates the market with in excess of 500 million copies of the Office productivity suite in use worldwide.

However, Google's recently proposed acquisition of Postini - a company dealing with email security and management - is a clear indication of the fact that the Mountain View company will aim to push the adoption of its Google Apps suite of online services and products to the corporate ecosystem. Google announced that it would cough up no less than $625 million for Postini. Unlike Microsoft which is anchored in the desktop because of its two main cash cows, Windows and Office, Google delivers web-based software products supported by advertising.