The competition between Microsoft and Google is heating up. This time, the tech giants are dueling over cloud-based software tools (think calendars and online documents) and the small- and medium-sized businesses that buy them.

FORTUNE -- It may not sound quite as sexy as search, web browsers or mobile phones, but there's growing demand for moving all sorts of office applications to the cloud. That's why, Tuesday morning, Microsoft took the wraps off of its long-awaited Office 365, a suite of online productivity tools (and one of the worst-kept secrets in the industry). And it is enlisting big phone companies, which have had a sometimes uneasy relationship with Google, to help it get the tools in the hands of customers.

That's also why, earlier in the week, Google pre-empted the launch with a snarky blog post titled "365 reasons to consider Google Apps." More