Additionally, as I've pointed out before, Google's doggedly improving Google Docs as time goes on, and responding to feature requests from users. I'm sure that within a year or two it'll have the mission-critical features that it lacks right now (such as document mail merge, for example).
Another significant issue with Office 365 is that it's geared towards Windows. This isn't surprising considering Microsoft is at the helm, but Redmond has to accept that this kind of approach is increasingly anachronistic in our modern day and age.
As a small business I have to cater for employees who decide to use their own IT, which makes sense for my IT costs, too. Some of them use Apple Macs and iPhones. If I upgrade to the Enterprise subscription of Office 365 to get a desktop installation of Office 2010, my Mac users will be left in the cold. Office for Mac isn't offered as part of the deal, and isn't supported even if the user already has it installed.
And as my colleague Tony Bradley pointed out yesterday, iPhone support for Office 365 is very limited indeed (although Windows 7 Phone is fully supported, as you might imagine).
Sign up for CIO Asia eNewsletters.