Google and the Office game

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googlecrosshairs.png

Google has always denied that it has any ambitions to take on Microsoft’s flagship and very lucrative Office business with its online apps. Not anymore.Fortune magazine “outs” Google’s office ambitions. The company has launched a paid version of its documents, spreadsheets, calendar and email programs, the magazine reports.

Here are some of interesting facts:

  1. 100,000 small businesses are running a trial of what is Google Office.
  2. The paid version will cost $50 per account per year and will get the buyers 10 gigabytes of storage and telephone support.
  3. Google’s Dave Girouard claims that at $50 a year, Google will make money.
  4. General Electric and Proctor & Gamble are running small trials of these applications.

Bottomline: It is an interesting chess game going on between Google and Microsoft. Redmond can use OS to become a reasonable force in search, thanks to the inertia of the masses who don’t change default search engines. Microsoft wants a piece of the ad revenue. Didn’t Bill Gates recently say that advertising is a viable business model for software vendors. Ergo Windows & Office Live!

Google knows all that, and rightfully worries about it. It counters with an equally devilish move.

Google’s strategy is to totally commoditize the market, try and take away pricing power from Microsoft and try and put the megabillion dollar a year “Office” business division on the defensive. Why? Even if Google manages to convince a million small businesses to sign-up and pay $50 a year, it would still be a $50 million a year business that wouldn’t move the needle as far as revenues are concerned.

What will Microsoft do? Lower the price on Microsoft Office? If they do that, then the cash cow business is hurt. Wall street is not going to like that – given that Vista revenue machine isn’t going to really rev till end of 2007/early 2008. Will Google be successful? Who knows – it is fun to watch though!

Information Week has the full lowdown with comments from most of the well known software analysts.

50 Comments

Malcolm McPherson

Malcolm McPherson here from TheFutureOffice.com and we welcome Google’s intrusion into the Office market space.

Microsoft’s new Office 2007 is a very expensive re-write of Office XP, looks more beautiful than earlier versions, but does not add very much more to the pot and requires users to learn yet another interface system.

We know because out of necessity we are all using it here to ensure that you can use it with our LiveView web office CRM service, but the truth is that very few of our users have moved to 2007. Why should they, as earlier versions are quite adequate for what their businesses requires.

It is our conviction that over the next 10 years most businesses will move to having their data hosted on the Internet but that will not happen until the service offered can bring all work actions into one desktop screen. LiveView is pioneering a move away from naming files, naming emails and directory structures and replacing it with a customer-contact-actions layout which enables a view of all the data necessary to do your job….right now where all the usual computer actions are automated.

Google’s offering will make people aware of the Web Office space and the advantages of hosting to allow access to business data wherever you have Internet access. This cannot but promote this new hosting segment of the market.

Coupons

I sent an email to Google (Mike Nelson) so that some of the questions here are clarified.
When he replies I’ll write here.

edbong

Google Apps is primarily competing with Exchange today… not really office. My bet is Google Apps will move towards file synchronization… and you will be able to do that through the API…. and the API is the key.. not the AJAX interface.

For example we are developing an FREE open source “business application platform” (think salesforce.com). Our first application is working tightly integrated with GOOGLE APPS. Check it out if you are interested. http://www.applicationexchange.com

The Google APPs (with its API) is the organic counterpart to Microsoft/BT marketplace… http://news.zdnet.com/2100-3513_22-6161402.html.

The heat is on.

Laura

This is really interesting. Just out of curiosity since Google will charge $50 per accout per year, how much does Microsoft currently charger per account per year?

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