Some say that Google has taken a direct stance against the Redmond Giant (that is, Microsoft) when it launched its online productivity and collaboration web apps, Docs and Spreadsheets. While Google continues to deny that they’re trying to replace Microsoft office (and insists that they’re just offering a complementary solution), it’s no secret to those in the know that Google’s office suite offering is slowly taking the form of an office competitor. Granted, of course, that Google docs is in a very different playing field and with a different set of rules (a web native app, versus a desktop application).

With the release of Google Toolbar 4 for Firefox, Google has added the functionality to make its office apps (Docs and Spreadsheets) the default application to open word documents and spreadsheet files, either for files downloaded from the Internet or local files on your computer, or both.

Take note that you have to use the Firefox version of the Google Toolbar 4 to make this work. So to get things started, if you still don’t have it, install the latest version here.

Follow the usual steps in installing a Firefox extension then restart the browser when it’s done. After Firefox restarts, you can fill in Toolbar configurations with your preferences, including your desired privacy settings (and your Google account credentials, if you wish). Then go to the options dialog of the Toolbar (Settings–Options) and find then tick the Docs and Spreadsheets checkbox. Clicking on the more… link will give you more information about the feature.

If you click on the File Settings button, you can further customize the behavior of this feature including the file types that will be opened by Google Docs and Spreadsheets, as well as the method of opening those files.

In the default setting, you have to drag a file to the firefox browser or click on a link to a supported file to open it with Google Docs and Spreadsheets.

But there’s one check box under File Settings of Google Toolbar that will also use Docs and Spreadsheets if you double click on any supported file type in your desktop. You will notice that Excel and Word files will change icons once you have checked this last check box. Checking all the checkboxes for the methods of opening a file will replace Word and Excel as the default Programs for .doc and .xls files

There are three methods of opening a file with Google Docs and Spreadsheets:

clicking on a link to a supported file type

dragging a file to your browser

double clicking a file in your desktop

You’re all set for a Google Docs and Spreadsheets powered desktop. Take note though that since Docs and Spreadsheets doesn’t support the offline mode yet, hence this setup will work only if you have a running Internet connection. Also, Docs and Spreadsheet will make a copy of your desktop file online and save changes there, so changes will not be reflected in your local file unless you download the file locally. While it may still take a while for this setup to be perfect, it’s amazing how Google is slowly delivering the concept of a Web OS.