As conversations about Office Live Workspace emerge, I expect to read more like this one:

Tim: What happens when you are working on a document at the airport, your wi-fi pass expires, and you hit Save? Maybe a beta tester can answer this. Does Word or Excel prompt for a local copy instead? And if you save such a copy, how do you sync up the changes later?

Kip: Just tried it, Tim. Opened a document from Workspaces, made a change, disconnected from the internet, and hit “Save to Office Live”. Word immediately opened the local My Documents folder and offered to save it there, just as if it was a local file.

Tim: Thanks for checking this out. That’s not ideal in my view. It should save it locally but automatically synch it at the next opportunity.

In fact, I think the folder in which Workspace offered to save Kip’s file was a Workspace folder, not a local one. At least, that’s what I saw when I repeated the experiment:

From there, I clicked the Save button and saw this:

Fair enough. Network problems were preventing a connection to the server. I’d have needed to make a conscious choice to save locally.

What then? A variety of scenarios are plausible. That’s the good news, but also the bad news, about having an offline option. When editable documents can live on multiple local drives and in the cloud, people need to be aware of multiple names and locations. It’s inherently harder to collaborate. But you can untether, and you can use full-strength applications.

With Google Docs, where there is only a single cloud-based editable document, people need only keep track of one name and location. It’s inherently easier to collaborate. But you’re always tethered, and (for now) you can only use rudimentary applications.

Given the differing capabilities — and ubiquities! — of browser-based and native applications, there is no single right approach. But as always, extremes converge. Office Live Workspace already has web-only components, like its simple AJAX note writer, which tends toward the model of a single cloud-based editable document and optimizes for collaboration. Meanwhile Zoho already has a Google Gears-based offline mode, and a plug-in for Word and Excel. It goes the other way, enabling editable documents to be in more than one place and enhancing productivity.

One way or another, we arrive at a midpoint along the continuum which is aptly described by the phrase software plus services. The challenge for everyone will be to figure out how best to merge the collaboration benefits of one model with the productivity benefits of the other.