It depends on the situation. Two options are explained below:

Option 1: Uploading and Storing 

  • You are allowed to upload documents to Google Drive and choose not to convert them into Google Docs format.
  •  In this case the document is simply stored in its original form on Google's server. 
  • You can then share the document with others, who will be able to download it in its original form.
  • Non-Compatible File types such as Adobe Photoshop or AutoCad will be uploaded and stored using this option.  

Option 2: Uploading and Converting

  • You can choose to upload a document to Google Drive and have it converted into Google's format. 
  •  In this case some formatting may be lost in the conversion, because Google Docs does not have as many formatting and features as Office. 
  • In general the simpler the document, the more accurately it will convert if you choose to convert it.
  • Documents would be accessible through the web so users can work on their documents from anywhere on any device. 
  • Documents can be shared and collaborated easily.

Compatible file types

These are the file types that can be converted to a Google document, spreadsheet, or presentation:

  • For documents: .doc (if newer than Microsoft® Office 95), .docx, .docm .dot, .dotx, .dotm, .html, plain text (.txt), .rtf, .odt
  • For spreadsheets: .xls (if newer than Microsoft® Office 95), .xlsx, .xlsm, .xlt, .xltx, .xltm .ods, .csv, .tsv, .txt, .tab
  • For presentations: .ppt (if newer than Microsoft® Office 95), .pptx, .pptm, .pps, .ppsx, .ppsm, .pot, .potx, .potm, .odp
  • For drawings: .wmf
  • For OCR: .jpg, .gif, .png, .pdf

Macros are not supported at this time and will be dropped during conversion.