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August 31, 2006

Google Apps for Your Domain - A Threat to Microsoft?

Google's foray into Microsoft Office territory has drawn a lot of press.  The lines of thought break down to 1) this is a real challenge to Microsoft or 2) Google's offerings are too lightweight to have any dent on the market for Office.  It is hard to say what effect Google Apps for Your Domain is ultimately going to have.  Major corporations are wedded to Office and aren't likely to switch anytime soon. 

It's not just a matter of Office works, so why switch.  Mere mortals pay the bloated street price for Office ($400-$500 range).  Corporations and academics pay a fraction of that.  My legitimate copy of Office 2003 Professional with license and holographic label cost a mere $19.95 at academic rates.  I'm sure General Motors pays a lot less than this by volume, as does every Fortune 500 company.  My price pales to that of the Educational Edition sold around $125 at Costco, and that requires an academic affiliation per the license agreement.  Microsoft is making a bundle of cash from Office even at these deflated prices.  Google may not be competitive with a lesser product, even at free.  None of this even takes into account the broken copies of Office that are passed around by hand or via the web. 

Lets take a look at Google Apps for Your Domain before we get ahead of ourselves.  Google has its own press release describing the product:

Google Apps for Your Domain, an expansion of the Gmail for Your Domain service that launched in February 2006, currently includes Gmail web email, the Google Talk instant messaging and voice calling service, collaborative calendaring through Google Calendar, and web page design, publishing and hosting via Google Page Creator. Domain administrators use a simple web-based control panel to manage their user account list, set up aliases and distribution lists, and enable the services they want for their domain. End users with accounts that have been set up by their administrator simply browse to customized login pages on any web-connected computer. The service scales easily to accommodate growing user bases and storage needs while drastically reducing maintenance costs.

This description doesn't sound like much of a challenge to Office, unless you take into account the Writely word processing application, Google Spreadsheet, and maybe one or two other software as service apps in the Google cloud.  Those products will evolve, but even then it is an open question as to whether they will make effective substitutes for Office.  Open Office, Star Office and other free or low cost packages have failed to budge Office from corporate America (and the rest of the world).  WordPerfect is a niche product compared to its former glory in spite of its features.

So where's the appeal for Google Apps for Your Domain?  It's going to be with the poor guy or gal that can't buy into an Office volume program, the small business who doesn't have the same leverage with Microsoft as a multi-billion dollar business, smaller schools, and perhaps, even larger schools who don't want the headache of running mail servers and calendar apps.  That only diminishes the need for Outlook and not the entire Office suite.  Some may see that as a plus give Outlook's spotty record with worms and viruses.  This is the market that is underserved by Microsoft.

Service integrators such as IBM and smaller management companies are likely to see erosion in sales before Microsoft ever does.  What would be more interesting to see is a company such as IBM cutting a deal with Google as a marketing reseller.  That development might send a message to Microsoft.

Having said all of this, there is still an effect on Redmond that goes beyond direct competition.  At the very least, Google, with brand name and millions of users, keeps Microsoft honest about being innovative.  The company talks a good line in court, but perceived competition from the likes of Google force it to do something to keep its edge rather than react (monthly patches anyone?).  I like Microsoft products and I have no currently working Apple equipment.  Yet I still think there is more imagination in Cupertino than in Redmond.  Apple can dig at Vista with their Leopard OS all it wants but that won't translate into market share as Microsoft co-opts the best features some six months later.   

it's going to take a company such as Google to draw out that competitive ire.  Microsoft doesn't have the same kind of hold for the web crowd as they do with Wall street.  Don't like Hotmail?  There's Yahoo and Gmail, and now free AOL mail accounts.  Collect them all.  That's really Microsoft's disadvantage in that Google has the stronger and more positive web brand.  Unless Microsoft can change that, they will have won the desktop and lost the web.

Other news about this is at Computerworld, Information Week, the Register, and Gartner.

August 31, 2006 | Permalink

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