Generally it’s not a totally fair comparison, though. LaTeX struggles with many figures as does Word, however in the latter when used properly you won’t have missing or misplaced figures ever (a common complaint leveled at Word). Tables are horrible to do in LaTeX, even more so if they span multiple pages. This is something far easier done in a graphical program. This holds similarly for matrices and equation arrays. Also with a well-defined set of styles there are few surprises in both worlds.

LaTeX on the other hand is able to produce virtually anything due to its gigantic library of packages. Chemical structure diagrams, chess games, musical notation, syntax-highlighted (albeit poorly) source code listings, syntax diagrams and trees, &c. The list is quite long, although most of those things cater for a niche market and are only ever used by a few people. With the ability to insert figures into a document you can solve most of those problems with special software, tailored for the respective domain, too (well, not the source code one).

For things that appear in plain text, such as math, there should be native facilities but for many other things inventing a markup language in a Turing-complete document description language is quite overkill imho.

1. The image is broken! I can’t see the graph!

2. I know exactly what this graph looks like because I have drawn it for people probably hundreds of times. I don’t recall whether I figured it out myself, or saw a pointer on comp.text.tex or some other place.

Google Docs is far better than it was two years ago. I hope the next two years shows as much or more improvement.

For documents categorized as to the left of the intersection, I think one can effectively use Google Docs.