29 Comments

Summary:

Earlier today IBM (IBM) threw its weight behind the Open Office project, a move that will give the open source productivity suite some much needed support in the enterprises. And if that wasn’t enough, now Google (GOOG) has upped the ante on Microsoft Office by teaming […]

Earlier today IBM (IBM) threw its weight behind the Open Office project, a move that will give the open source productivity suite some much needed support in the enterprises. And if that wasn’t enough, now Google (GOOG) has upped the ante on Microsoft Office by teaming up with consulting company, Cap Gemini. Cap Gemini is going to help push the Google Office aka Google Apps Premier Edition (GAPE) to the enterprises.

If you consider dozens of start-ups with their own twist on Office 2.0 as potential competitors, then it seems it is open season on Microsoft Office – one of the biggest cash engines for Microsoft (MSFT). The Cap Gemini deal seems to worry Microsoft, notes Mary Jo Foley, a long time Microsoft observer, who writes on her blog:

Today’s CapGemini-Google partnership to sell Google Apps Premier Edition (GAPE) must have struck a nerve, as Microsoft sent out a lengthy and unsolicited response on the deal.

Cap Gemini can help overcome the lack-of-support stigma for Google. A handful of large US corporations have tried out Google Apps in recent past. Large enterprises are getting increasingly comfortable with using software as a service. The success of Salesforce.com and other such offerings are indicative of these changing attitudes.

Still, one has to think of it as a long term attack on Microsoft’s Office franchise. For fiscal 2007, Microsoft Business Division that is responsible for Office and other products such as ERP brought in over $16.4 billion in revenues and had an operating income of $10.9 billion.

In comparison, Google will have sales of over $11 billion for fiscal 2007. Taking that as a backdrop, it seems foolish to suggest that Microsoft Office juggernaut is under any sort of threat. Unfortunately the history does seem to suggest that Barons of Redmond need to watch out.

The commoditization of software has made its impact felt on the server software, web servers, storage servers, and application servers ( J-Boss). If someone was out charging high prices for products, open source and lower cost products emerged and caused rapid commoditization. GAPE is trying to accelerate the process and bring it to productivity apps.

You’re subscribed! If you like, you can update your settings

  1. It’s a good start for others although its likely to go the Linux way – gradual improvement in market share for the other app providers. Microsoft is in everyone’s lives as much as Google in the search engine business.

    The big fellas are trying to get into the other’s shoes which makes the battle even more interesting :-)

  2. DealBreaker.com Tuesday, September 11, 2007

    Opening Bell: 9.11.07

    OPEC considers modest oil output rise (Reuters) It’s great when OPEC announces plans to lift output, but it’s always like they’re doing us some kind of favor or something, which makes the whole thing feel dirty. It’s all so…

  3. yee ha! this should get interesting now :)

  4. The bad guys always lose in the movies I watch, why would this drama play out any different. Every new five figure Office seat license the villain sends out is one more excuse for a small or medium size business to try GAPE.

    “…Dear customer, your 110 seat Office license is due. Please pay…”

  5. I’m a serious Microsoft Office user in the workplace. I go so far as to develop programs using all the Office apps in VBA.

    That said, I really see a future in online apps. And I see it clearer after this weekend. I installed the new Office and I’m skeptical of the new design changes. They are probably ok, but I noticed some really stupid elements, as if a dummy had designed it. And these upgrades should have been done years ago. What Microsoft has done in their latest release of both Vista and Office is dumbfounding. Vista is a pure disappointment and I can’t believe they spent 5 years doing this.

    More importantly, as I performed an install of the new Vista on my machine, the most comforting thing was not worrying about my email settings, files, etc. I use Gmail. This was absolutely groundbreaking for me after years of upgrades and backups.

    I can see a very definite future of online apps. Ellison was years ahead and was right. Just give me the functionality and it’s all there and ready. As someone said, functionality is the easy part. Yet it’s something Microsoft seems to have trouble doing. Microsoft has just about lost it IMO.

    I suppose with some competition, Microsoft will pay more attention to their core products. But do they have any mojo? I don’t think so. Well, I know they don’t have it after this weekend.

  6. I agree that web and open source office apps are good for basic needs. But as soon as you need to do anything with forms, templates and fine-tuned styles, it’s hard to beat Microsoft Word, unless you jump up another price notch and go for Adobe InDesign. I often find myself starting a document in Google Docs because it’s ridiculously easy to collaborate through the first few iterations of a document with colleagues. Then, when the content is set, I pull the document into Word and spruce up the style. I remember that Open Office uses style sheets similar to CSS, but I could never figure them out. The UI was not ideal. If I could define a CSS sheet for my printed documents and just apply it in Google Docs (or any other web-based collaborative office product), that would be money.

  7. bla bla bla…Om, have you ever worked at a corporation? seriously? I have been all over as a contractor and I can assure you that this is not going to make a bit of difference. In fact, MS is doing an excellent job integrating their sharepoint services with office and I can tell you that from an I.T. perspective, sharepoint is a huge positive that empowers departments and basic users. We had desktop publishers responsible for page creation, layout, and content editing with about 2 hours training…Giving them a pallet of webparts to build out their sites is the most pain free task. You need to get out more often om…all this startup stuff and fluff 2.0 reporting you do has warped your sense of reality.

  8. Lions don’t go after a healthy bull. They hunt the weak. Seems the same is happening here. Yes MS still has the advantage, but all of the sudden it looks and feels like they are weaker than they ever were. Biggest reason probably is, that nobody feels like they have done anything massive since 97.

  9. It will be interesting to see what MSFT will do to react to Google.

    As we have seen in the past MSFT goes on buying spree to keep up. They could purchase ZOHO who has been excelling in this space.

    Read some more of my thoughts:
    Although Google’s offerings are real basic in this space, everyone else realizes their potential.

    Both MSFT and Zimbra made these announcements yesterday as they know what could be ahead of them.

    I hope Google strengthens this further and ensures that this program wouldnt go down the way of Froogle or Answers.

    Read more of my thoughts:

    http://abhishek.tiwari.com/2007/09/10/google-drawing-heat-after-enterprise-market-announcement/

  10. why would ms buy a pile like zoho. again, you people are not in the enterprise space seeing what ms is doing, you just see word, excel ect….They are as focused as ever and integrating their portal services with office, and implementing solutions that make a difference in the enterprise…

  11. Ethan Dickenson Tuesday, September 11, 2007

    Zoho and Open Office and soon Google Analytics are providing a via solution to an Excel spreadsheet but the business analysts are currently using Excel and unless these guys can do more than meet Excel’s abilities then why switch? It must be frightening for Microsoft to have IBM back Open Office because that is exactly the kind of move that could topple the above noted monopoly. Once Excel goes, Office goes.

    I author a blog on freeware and my blog is different because I only refer my readers to the ‘best of breed’ selection for each category. Check it out and let me know what you think!

    Ethan Dickenson, Author, Today’s ‘Best of Breed’
    ~~~~~A suite of freeware for Windows~~~~~
    http://todaysbestofbreed.wordpress.com/

  12. JC Codez

    To respond to you, yes I did work for a corporation. Time Warner and we had to use Microsoft Office. You are not going to get any argument from me that it isn’t going to be an easy to unseat Microsoft Office anytime soon.

    I think everyone is trying and using lower price as a lure. For Google it makes strategic sense to attack this business, and keep trying to go after big companies.

  13. JCCodez

    to your second comment, I think you are onto something – Office + Live Services + Communications : that is an interesting combination and that is why I think most Office 2.0 start-ups are going to get screwed.

    Google is also plotting along the same lines, and like Microsoft is thinking about “collaboration and communication” as the focus.

  14. Had to use microsoft office? Om, I still think your comments are mis-placed. How long ago did you work at Time Warner? Do you think things have changed since then. I will tell you what has changed, access to corporate information…building out infrastructure to organize and access information. Microsoft is making leaps and bounds in this area, far beyond what google or openoffice.org have. You seem to be looking at this as a very simplistic model from an I.T. perspective. I suggest you brush up on the latest in I.T. technology find some people that are actually in the trenches and have valid input related to your title. Your article is great for quick hit headlines, but when it comes to depth and analysis of current available technology, both from microsoft, ibm, or googol, you fall dreadfully short.

  15. “Zoho and Open Office and soon Google Analytics are providing a via solution to an Excel spreadsheet ”
    Have an engineer use these solutions and watch them laugh in your face. Have you ever seen what an engineer or financial analyst does with spread sheets, how they pull data from oracle, sqlserver, flat files ect…? I wish you would struggle to provide an engineer a solution related to subsurface drilling analysis…You can’t do it.

  16. JCCodez

    you are being critical, but not sharing us your insights.

    it be great if you can outline how you see the situation is at present, and why they are going to fail. It be of immense help to everyone. I for one would welcome your lesson!

  17. I think the elephant in the room is Oracle. In my corporate world experience, all the information being manipulated in those fancy Excel spreadsheets comes out of an Oracle database. If they were to embrace Open Office, that would really be a big deal.

  18. MS Office will be a specialty application on the high end and the mainstream will be left for the rest. Where is this rule? 80/20? or 90/10?

  19. This is just the first volley in the upcoming Software as a service wars. SAS is coming, and google, and Microsoft are the big two in this space. hotmail vs gmail, live.com vs. Google Search, these are small potatoes compared to the office automation as a Web App.

  20. Opinions Vary on CapGemini : Venture Chronicles Tuesday, September 11, 2007

    [...] that is a significant portion of the market really wants Google to be successful with office apps in order to provide a lever to use against Microsoft. Whether or not Google is successful is [...]

  21. Scott Colesworthy Tuesday, September 11, 2007

    Has anyone done a detailed comparison between Microsoft Office and the current version of Premium Google Apps yet?

    What options does one have when using Google Apps when not connected to the net?

    How is Google addressing compatibility with office? (The need to convert a Google document to an office document since most people now use office.)

  22. Yes jcodezz is right that Microsoft is the only Big boy in the corporate IT (on the desktop and lightweight server side that is)..but let me share something. I have been an IT (focused on Infrastructure) consultant for last 12 years and this year was the first year when I was asked to evaluate Zimbra email software and do a side by side comparision against Exchange 2007.And Zimbra was damn impressive – however their sales and service organization wasnt – so the client ultimately decided that they will go for a exchange upgrade. However I am sure that next time an upgrade is around the corner for exchange – if Zimbra or some other alternative email Service can prove their worth – they have a bloody good chance of replacing exchange (just like once upon time exchange replaces sendmail/imap/pop unix servers).Same thing with office software too. I see corporates experimenting more and more with open source software because their qualities are improving , the business model around them is improving and overall they are catching up with Microsoft. Agreed it will take time but nothing lasts forever (at least not in this world) and there may be a time when Microsoft will find its worthy replacement. The signs are increasing NOT decreasing my friends.

  23. Bloj,

    thanks for your nice summation. Appreciate it.

  24. Is It A Steal Or Did They Blink? « GigaOM Wednesday, September 12, 2007

    [...] cuts as well? If that happens, then it could put Microsoft’s cash cow on a crash diet, giving Office wannabes a chance to [...]

  25. BARZIN DARAGAHI Friday, September 14, 2007

    For future reference, Capgemini is not spelled Cap Gemini. :)

  26. Google and IBM: The Office is Closed

    Last week saw announcements from Google and IBM about office productivity app launches that, according to the tech punditocracy at least, promises serious threats to Microsoft’s lucrative hegemony on the enterprise desktop. Of course, one would…

  27. Free For All… Office Sweepstakes « GigaOM Sunday, September 30, 2007

    [...] by Om Malik Sunday, September 30, 2007 at 11:31 PM PT | No comments Everyone wants a piece of Microsoft’s (MSFT) Office suite. Google (GOOG), Sun Microsystems (JAVA), IBM, dozens of [...]

  28. Microsoft Office Is Coming To the Cloud – GigaOM Tuesday, October 28, 2008

    [...] denied that its browser-based Office suite is a response to other online productivity software like Google Docs, which has a relatively small market share. But the advance announcement suggests the company wants [...]

Comments have been disabled for this post