In a post on the official Office 365 Blog Amanda Lefebvre, technical product marketing manager for Office Web Apps, describes how Microsoft will be "extending more of the Office experience to the Office Web Apps" and is investing in "user experience, social and collaboration, and broad cross platform browser support" to make this happen. 

Recent updates to the Office Web Apps, which are used for web editing of Office files stored on SkyDrive, include the addition of find and replace functionality in the Word Web App, and improvements to launch times and general file management. But, what really caught our attention in the post, was a trailer for the forthcoming availability of real-time co-authoring in the Office Web Apps, allowing multiple people to work on the document at the same time and see the changes being made instantly. Office Web Apps does already support collaborative working, but, currently it is necessary to refresh a document in order to see changes made by another user.

This real-time co-authoring functionality is something that is already support by Google Docs and it's one of relatively few areas where the Google service is widely considered to have an advantage over Microsoft's Office Web Apps in terms of functionality. If you're working on a document with two or more people, being able to see real-time changes is a real boon to productivity, as it is a more natural collaboration style.

Office Web Apps may not have a direct impact on Windows Phone, but they are both part of the total value proposition of seamless productivity across mobile, web, and desktop that Microsoft sees as an important way to differentiate its products. This can be seen as part of a wider trend that sees an increasing portion of the value of a smartphone lying outside the confines of the device itself as the definition of the smartphone ecosystem expands. In the For many, the way in which they integrate and interact with other devices and services will be the key factor in deciding which smartphone to buy.

Real-time co-authoring may be a subtle change to the way in which the Office Web Apps work, but such marginal gains do add up, and will play an important part in the "war of ecosystems". 

Here's the relevant portion of the blog post:

Today, we have co-authoring capabilities across Office Web Apps and the Office desktop applications that allow multiple editors to work in a single document at the same time. Collaboration is highly flexible, allowing you to work together at the same time when everyone is online or even when working offline all while preserving the rich formatting and design of your document and ensuring users don’t edit on top of each other.

Since first introducing co-authoring in the Office Web Apps, we’ve seen an increasing demand for more fluid and dynamic collaboration capabilities when working online. We’ll introduce real time co-authoring in the Office Web Apps so that all file authors will automatically see presence and edits from others as they happen without needing to refresh. This is a subtle change, but a great enhancement to enable even richer collaboration.

We have started to deliver on this in the PowerPoint Web App where users can now see each other's changes almost immediately. You can see it in action in the video below or give it a try yourself with your presentations stored in SkyDrive or SharePoint Online. In the next few months you'll see PowerPoint Web App co-authoring get even faster and real time co-authoring support in the other Office Web Apps.

Here's a video that shows this real-time co-authoring in action in the PowerPoint Web App:

Video description:

The updated PowerPoint Web App co-authoring experience, where users can now see each other's changes almost immediately. In the next few months you'll see PowerPoint Web App co-authoring get even faster and real time co-authoring support in the other Office Web Apps. Now give it a try yourself with your presentations stored in SkyDrive or SharePoint Online.