Paid-for version: Microsoft Office
Open-source alternative: OpenOffice
OpenOffice is a feature-packed alternative to Microsoft Office. It's developed by Sun Microsystems in collaboration with a community of dedicated contributors. The primary applications of OpenOffice consist Writer (word processor), Calc (spreadsheet), Impress (presentations), Base (databases), Draw (vector graphics editor) and Math (mathematical formulae editor, similar to Microsoft Equation Editor).
The good: For home users and families it offers everything you'll need to write letters, publish documents, formulate graphs, build slideshows and design simple Web pages. It looks and works like Microsoft Word and because it's free, it'll save you about £119 -- the cost of Microsoft Office 2007. For families, OpenOffice is an absolute must.
The bad: Microsoft Office comes with Outlook, which is vital for most business users. For this reason, OpenOffice isn't an alternative to Microsoft's corporate solutions. It's also lacks some of the advanced design functions of the 2007 version of Word.
Conclusion: OpenOffice will be perfect for most home users. Business users will almost certainly need Outlook, though OO may still provide all the functionality needed for word processing and spreadsheet work.
Download it here: openoffice.org