Google is adding a presentations application to Docs & Spreadsheets, narrowing the competitive space between this productivity and collaboration hosted suite and Microsoft's Office suite.

Google CEO Eric Schmidt made the announcement at the Web 2.0 Expo event in San Francisco Tuesday during a keynote appearance. The move had been widely expected, as Google has embarked on developing hosted communication and collaboration products for organizations.

Prior to breaking the news, Schmidt demonstrated the application to the attendees, showing several slides with mock Google announcements for the day. "None of these [slides] are really the announcement, but in fact the thing that is doing this presentation is the announcement," Schmidt said.

Now, Docs & Spreadsheets will feature a word processor, a spreadsheet, and a presentations application, but Schmidt said the suite isn't a direct competitor to Office because Docs & Spreadsheets doesn't have all of Office's functionality. Also, it's more focused on Web collaboration than Office, which is a desktop-centric product.

In fact, Docs & Spreadsheets is an example what Schmidt called a new Web-based, hosted architecture for applications designed to let users collaborate and share information. Collaboration, he said, "is the killer application."

The presentations application will be delivered in the U.S. summer timeframe, said Jonathan Rochelle, product manager of Google Docs & Spreadsheets, in an interview after the keynote ended. He expects that as soon as it becomes available, the presentation application will also become part of Google Apps, the company's communication and collaboration suite for organizations. Google Apps includes Gmail and other hosted services, including Docs & Spreadsheets.

Like the other two components of Google Docs & Spreadsheets, the presentations application is being designed with collaboration and sharing in mind so that multiple users can participate in the creation and delivery of presentations, Rochelle said.

Google decided to add a presentations component to Docs & Spreadsheets as a result of user demand, Rochelle said, adding that Google isn't providing details of the application's features and functionality yet.

The presentations component will have import and export capabilities for Microsoft's PowerPoint, the presentations application in Office, in the same way that the word processor and spreadsheet applications have those capabilities for Office's Word and Excel, respectively, said Rajen Sheth, product manager in Google's enterprise unit. In this manner, Google's productivity applications give Office users the ability to share files and collaborate on them, Sheth said. In that way "we're adding functionality to existing Office tools," he said.

Also on Tuesday, Google announced it has acquired Tonic Systems, a company based in San Francisco and Melbourne, Australia, that has technology to create presentations and converting documents. "It will be a great addition as we add presentation sharing and collaboration capabilities to Google Docs & Spreadsheets," Google said in an official blog posting.

Docs & Spreadsheets is free, unlike Office. Google Apps has a free version and fee-based version.