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While the rest of the tech market was gawking at Apple’s astronomical financial report, a small, obscure cloud company in the Pacific Northwest, Smartsheet, launched a channel program for its Web-based project management and spreadsheet applications. Its intent: Capture the attention and business of a growing number of cloud app specialists reselling cloud productivity applications.

Based in Microsoft’s backyard in Bellevue, Wash., Smartsheet is looking to tap into the channel to capture business and drive momentum as an alternative to the market-leading Excel spreadsheet. It’s offering partners 30 percent off on initial and recurring fees, as well as the opportunity to incorporate

“There is a growing number of firms already versed in deploying Google Apps, Box, Salesforce.com and other SaaS services who are eager to respond to client requests for best-of-class cloud apps,” said Mark Mader, CEO of Smartsheet. “Coupling Smartsheet’s broad utility across industry and function with the significant momentum in the market makes this an optimal time to expand the available channels to sell Smartsheet.”

Smarthsheet is just the latest in the growing number of competitors looking to take a chunk out of one of Microsoft’s biggest revenue generators – Office, with its cornerstone Word. Google is already challenging Microsoft on multiple levels with its Google Apps for Business and Google Apps for Government. And this week, IBM unveiled “IBM Docs,” a new cloud-based word processor based on a revamped version of Lotus.

The bottom line: Microsoft’s moneymaker is under siege.

For the better part of the last two decades, Word has been the gold standard for business productivity apps. Word defeated WordPerfect for the word processor market, Excel dispatched Fox Pro 1-2-3 in the spreadsheet market, and Outlook and Exchange cornered the email market. Microsoft created the ultimate suite when it pulled it all together with PowerPoint for presentations and Access for databases.

Like Windows before, Office and its various applications’ dominance in productivity apps was unquestioned. Attempts to dislodge the suite from the pinnacle of the market – most notably the open-source OpenOffice suite – were largely unsuccessful. Even as Apple Mac sales surged, users wanted Office out of familiarity and compatibility.

The first serious challenge to Microsoft Office came with Google Docs and, ultimately, Google Apps. This free-to-consumers and low-cost-to-businesses suite isn’t as good or feature-rich as Office, but it’s good enough – and that’s swayed a notable chunk of the market, particularly in the government and education sector. The competitive threat is so serious, Microsoft and Google have waged a series of court battles over government contracts.

Big Blue is better. IBM Docs can follow up on Google’s success and put a dent in Microsoft’s armor. IBM Docs is reportedly a feature-rich cloud application that gives enterprises the word processor they expect without the cost. IBM plans to use its leverage in the enterprise through sales of servers and integrated systems to pave the way for IBM Docs. It’s a strategy that just might work.

The prospects of Google Apps, IBM Docs and other cloud-based challengers make the long-running legal battle between Microsoft and Novell that lead to the demise of WordPerfect seem almost silly.

There’s more to this than just productivity applications. Microsoft has been busy integrating its collaboration software, such as the Lync communications server and SharePoint, to the Office suite. Not only does such integration make sense, it’s part of a competitive arms race.

Early indications can be seen that IBM may be thinking about “socializing” its productivity apps. The social enterprise – one that uses social tools rather than conventional email to communicate – is a major IBM initiative. Internally, IBM uses Lotus and Symphony social apps; it’s not too much of a stretch to think IBM will enable its word processor with integrated social tools.

The same could be said for Google. It was revealed that Google’s social network, Google+, now has more than 90 million registered users – mostly through compulsory memberships. Nevertheless, the social communications and “hangout” video meeting features are strong additions to the Google portfolio and even stronger business tools if integrated with Google Apps.

While not often thought of as a competitor, Apple’s iWork is touted by users as a solid and quite functional productivity suite. Through iWork, users get a word processor, spreadsheet, presentation app (Keynote) and email. When married to Apple’s cloud for storage and file synchronization, it’s a pretty attractive offering. iWork could start to gain market share as Apple Mac and iPad sales continue to climb.

Don’t count Microsoft out too quickly, though. The world learned through Microsoft’s most recent earnings statement that Office 365 – its cloud-based version of Office – has more than 100,000 business clients. That’s a substantial number, and it’s growing. Microsoft wants to continue converting businesses to Office 365 because it’s a more competitive offering and, ultimately, more profitable.

Cloud computing is creating massive opportunities for new and legacy tech vendors like Microsoft and Smartsheet. However, the path of this progress is legacy applications, such as Microsoft Office, which is no longer guaranteed the vaunted position of dominance its held lo these many years. Solution providers should expect more cloud challengers to appear on Microsoft’s flanks in the coming year.

The battle for the future of office productivity is just beginning.

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