Techcrunch covers the latest beta release of Office Live, called Workspace, which is Microsoft’s attempt at an online collaborative environment. Think Google Docs and Spreadsheets. Anyway, they weren’t impressed:

The big surprise is that Office Live Workspace includes a decent online word processor called Web Notes that is comparable in most ways to other Web-based alternatives. It is fast, supports a handful of different fonts, font sizes, and formatting. Nothing too fancy, but enough to write a memo, take notes, or even write a draft of an article. There is no spellcheck, though. And—its Achilles’ Heel—you cannot export a document from Web Notes to your desktop. Anything you write in Web Notes is trapped inside Office Live.

If Web Notes feels like an afterthought, that is because it is. The way you are supposed to write documents in Office Live is with Microsoft Word. Once you upload a Word document to Office Live, it automatically syncs every time you make a change on your desktop. So you edit in Word, and all the changes are reflected in the version on Office Live. (Goodbye, Live Documents). Office Live is a hosted version of Sharepoint. Unfortunately, this works only if you have a Windows machine running XP or Vista, with Office XP or a later version. The syncing does not work on a Mac at all.

Microsoft are still light years behind the pack when it comes to Office 2.0. When you consider just how good the offering from Zoho is, it becomes pretty embarrassing…