The most commonly cited alternative to anything that's expensive and closed (Windows, Office) is something that's free and open (Linux, OpenOffice). But a third alternative has made headway: something proprietary, but either free or so cheap you won't care.
Consider ThinkFree Office, an MS Office competitor that's not in the vein of OpenOffice. It's a for-pay product and it's not open source, but it's to be offered at $50 or less for the whole suite -- and, most crucially, also to be offered as an add-on with netbooks at what I imagine is a price substantially lower than anything Microsoft would offer.
I gave ThinkFree a whirl on a provided Atom-powered Dell Inspiron 910 Mini, and from the outside it is indeed remarkably close to the classic Office 97-through-2003 look that most of us are familiar with. I didn't have trouble opening existing Office documents, either (including files save in Office 2007's OOXML format). There's a whole slew of likeable features, such as the automatic document sync that lets you access your work anywhere you have an Internet connection, or the save as .PDF function.
When I spoke with the folks at ThinkFree, they cited the interface as one of the program's big potential attractions -- it so closely resembles Word (and the rest of Office) that most people will never know the difference. The major competition in this regard is, of course, OpenOffice, although in my opinion the differences are minor. See for yourself:
If you want some hands-on time, you can snag a 30-day tryout of the netbook edition.
I'm curious to see if this will, indeed, make a significant dent in either Office (including Microsoft's on-line version of same) or OpenOffice on netbooks. I suspect it will be something of the same situation that's arisen with WordPerfect, which now comes as a preload on some desktop machines but doesn't appear much of anywhere else. But there are ideas here worth looking at, especially the ones that take advantage of the fact that a netbook needs a network connection to be truly useful.
InformationWeek has published an in-depth report on overhauling Microsoft. Download the report here (registration required).