The Microsoft vs. Google competition in the enterprise productivity space has been very slow to develop and remains an important investment consideration for Microsoft – will Google Apps eat into Microsoft’s dominance in the enterprise space as represented by Microsoft Office? As corporations look to avoid large capital investments in software, Google Apps low $50/user fee is attractive, enabling corporations to not only delay costly software upgrades but also delay upgrades to desktop and server PCs as well (a simple browser is all that’s needed). The ability to do collaboration built into the product in addition to centralized document management is an important trait of Google Apps – something that requires a bit more planning with Office out of the box. But customer reactions to Google Apps have been the big worries for Microsoft. Back in June, Microsoft had to fly in its COO to convince Proctor and Gamble to not go the way of Google and this is a sign that Google at least is providing a solid negotiation point for enterprise customers looking to pay less for IT (an article from the Chicago Tribune describing the scenario can be seen here).
In this competitive situtation, it’s no surprise then that Microsoft announced earlier this week that they will be providing a beta of its fully online Office product next year. The picture below is of its Online Word app, which will allow users to use any browser, though surely it’ll be better tested in Microsoft’s own Internet Explorer – my experience using the Web-based Outlook on Firefox suggests that they won’t go out of their way to make sure that all of the bells and whistles work on Firefox).
Microsoft has had a dilemma to date in that they haven’t been willing to cannibalize its own sales of Office with an online product, but the P+G story and feedback from customers may be finally bringing the Redmond giant into the online apps game in 2009. It seems that with this new product, Microsoft is trying to have it “both ways” – clicking on an online document will enable users to either edit it on-line or to edit it locally using a local version of Microsoft Word. Ultimately, I don’t know if a separate licensing deal for Microsoft is sustainable in the long run, as Google will ultimately try to bundle local editing (through Google Gears’ support for local files on a PC) for free. Still, Microsoft needs to provide this product to customers in 2009 in my view in order to at least be able to show its customers “we’ll be able to offer everything that Google does”. Microsoft’s ability to execute in this arena is somewhat suspect though, as it hasn’t done this type of app before, is saddled with a lot of legacy expectations (“will this support my old Word Macros”), and its recent track record of delivering major new systems (Windows Vista) on-time isn’t great.
The problem for Microsoft is that Google appears to be slowly improving its Google Apps functionality, learning from some of the best features of Office. What do I mean by this? The best feature of Office (in a corporate setting) in my view is Outlook, which provides a centralized calendaring and messaging base which can then drive other Office applications. Google Apps to date has been really just a mish-mash of different apps like Gmail, Docs, and Calendar. But with the most recent Google Labs features, I can see that they’re slowly starting to get it right.
The sidebars for Gmail now allow Google Docs and Google calendar items to be shown on one screen along with messages, which is very similar to Outlook’s main screen. Along with Google Talk, Gmail can now becoming that central portal for consumers and enterprises, encorporating messaging, appointments, instant messaging, and document editing in one spot. This is a powerful combination in my view, and helps Google Apps replicate an important piece of functionality in Microsoft’s flagship productivity suite.
Bottom line, increasing collaboration is going to be an important driver for productivity apps in corporations looking ahead to 2009, and Google is definitely pushing Microsoft to make a long-needed transition towards cloud computing. The open question mark in my mind is whether Microsoft can execute here and this remains to be seen, in my view.
