The BBC is reporting that Microsoft are planning to enter the online office suite market and produce offer a free, albeit advertising funded, online office suite.

Now this won’t be a version of Microsoft Office, but a web-based offering of the cheaper, more budget-oriented Works Suite that comes bundled with a lot of OEM-built PCs.

This could spell disaster for the other players in the online office suite market, Zoho, Google and others, as Microsoft will be in a position to advertise this service from within Windows Vista and on high-traffic sites like Hotmail and the Windows Live online services.

As yet there are only sketchy details available and there’s no confirmed date or any other information regarding this move, but still, even the suggestion of a heavyweight such as Microsoft entering this market could be a serious problem for the smaller companies and services offering online office functionality.

Whether this service will be dependent on use of Windows and/or Internet Explorer is still unknown, but it is certainly a possibility that Microsoft may choose to lock out other browsers and platforms by utilising Microsoft-propreitary technologies such as ActiveX to run the service.

The one thing we can be sure about from this move is that Microsoft is feeling threatened by other companies offering free, online alternatives to its office suite and is now obviously seeing it as a very important market.