I think a much stronger competitor to Excel than Google Spreadsheets is Dan Bricklin's WikiCalc. First it's buy the guy who basically invented the PC spreadsheet. That goes a long way in terms of street cred. Second, it's open source and free. Normally I don't think that's a big advantage in software, but when you're trying to dethrone a single monolithic company I think it can be. It makes it easy for people to try with no hassles of getting involved with Google's sales team, needing a rack for a boxed server, etc (nobody likes dealing with IT trust me). Finally, it can be self hosted so there's no worries about data security.

Sure it still has all the connectivity issues, but I think it's got a lot better story than Google spreadsheets for the enterprise.

Props to Kevin for getting me thinking in this direction http://www.blueskyonmars.com/2006/06/09/socialtext-partners-with-dan-bricklin-on-wikicalc/