Home Google Office: a Micro Media bulletin

Google Office: a Micro Media bulletin

Back in June I
spoke about
the corporate blogging project that I co-run with The Rights Marketing Company. Called Micro
Media Corp
, it’s a corporate blogging and podcasting program that aims to give
business people insights into the Web 2.0 and New Media worlds. Our first major customer
is British Telecom and we’re currently in expansion mode. We produce 3 blog bulletins
every week and they are written by top quality bloggers (some of who you’ll be familiar
with) – Scott Karp, Taewoo Danny Kim, David Stoughton (a UK
consultant), Steve O’Hear, Stephen Danelutti, Cale Hollingsworth and Rudy De Waele. I’m the managing editor of the Micro Media
blogging program, so I set the topics and edit the bulletins.

If your organization is looking for regular thought leadership in the Web 2.0 and
New Media world, email me and I’ll send you
subscription details.

To give you a taste of what Micro Media is all about, here is a bulletin that we did
back on 30 August 2006. The topic is still very relevant and I can assure you there are
some excellent insights inside this bulletin. Check it out…  

Google Office (a Micro Media bulletin from 30 August 2006)

This week Google launched Google Apps for Your
, a software service aimed at small and midsize companies. It’s a free,
ad-supported package which combines Google’s E-mail, calendar, instant messaging and HTML
editing software. Although it’ll be hosted by Google, customers can brand the service
with their own domain names. What’s more, it may be just the beginnings of a Google
Office according to this
InformationWeek article

“Later this year, Google plans to add its Writely word processor and Google
Spreadsheets to the suite, build online collaboration features that work across its
applications, and market the whole package to large companies for a fee. Google will
include IT-friendly features such as APIs, directory-server integration, guaranteed
performance levels, and telephone tech support.”

We asked the Micro Media bloggers to analyze this latest enterprise development by
Google. Is a potential threat to Microsoft Office?

Google’s offline weaknessSteve

Steve: “Google remains non-existent with regards to off-line functionality (Microsoft’s
main stomping ground). Because we are still a long way from reaching the goal of
ubiquitous Internet access, this in my opinion is Google’s enterprise deal breaker.”

Google will win over small businesses first – David Stoughton

David S: “The capture of a substantial portion of the small business market, coupled with
their demonstrable ability to evolve products rapidly, will be enough.”

The real battle will be fought over data– Scott

Scott: “When it comes to data, Google’s reputation among businesses is an increasing

More of a complementary relationship than a battle– Taewoo
Danny Kim

Danny: “Rather than a battle between Google’s apps vs. Microsoft Office for the throne, I
think if anything this is going to produce a more complementary relationship.”


Steve begins by outlining the pros and cons of Google’s office plans, citing off-line
access as a key point against Google right now. David thinks that Google will gain a
foothold in small businesses and emerging markets such as China and India – which will be
the platform into the larger corporate market in the long-term. However Scott argues that
data storage and Google’s relatively poor reputation in that regard is their archilles
heel. Danny concludes by wondering if Google’s online and collaboration office products
will complement, rather than usurp, Microsoft Office.

Steve O’Hear

While Google’s ‘office’ offering will be attractive to small businesses, partnerships,
and freelance workers (like me), I don’t think it’s currently a credible threat to
Microsoft’s enterprise stranglehold. To start with, embracing online applications and
storage has serious privacy and security implications. As Om Malik points out,
a quick read of Google’s privacy disclosure is
enough to temper any initial enthusiasm for Google’s offering. The passage that says that
Google can “change your account password, suspend or terminate your account access and
your ability to modify your account” as well as access “your email, contacts and other
information” is particularly disconcerting. Obviously, any ISP probably has the same
terms and conditions – but an enterprise would usually own and control its own servers,
to ensure confidentiality. Having said that, Google could easily solve this part of the
puzzle by offering a way to install their applications on an organisation’s
infrastructure – much like the Google Search

Secondly, and perhaps most crucially, the Google suite of apps just isn’t yet up to
the job – so for the time being, complements Microsoft Office rather than replaces it.
Microsoft is weak on collaboration, and it’s here where Google excels – users can import
Microsoft documents into Google’s service in order to collaborate with co-workers online.
However, Google remains non-existent with regards to off-line functionality (Microsoft’s
main stomping ground). Because we are still a long way from reaching the goal of
ubiquitous Internet access, this in my opinion is Google’s enterprise deal breaker.
Microsoft, on the other hand, is much better positioned to play catch up and is betting
on the success of Office 2007 and its associated server offerings – which include
collaborative functionality. In contrast, there is no sign of Google addressing its
off-line problem – although, by providing APIs, Google may be laying down the hooks for a
third party to solve the problem for them. What’s really required is a desktop
application that can access, synchronize and edit Google-created (and stored) documents –
Sun’s StarOffice maybe? Google and Sun are, after all, already in partnership.

That’s not to say that Google’s move into the online ‘office’ space (along with other
new entrants such as Zoho), isn’t already highly
disruptive. The immediate effect has been to serve as a wake-up call to Microsoft – and
this was very much reflected in the recent speech given by new Chief Software Architect
Ray Ozzie, who spoke about how important Windows Live is to the company’s future. In the
long term, the transition away from purely desktop applications and local storage, to a
world where our applications and data ‘live in the clouds’, isn’t just reflecting (and
reacting) to the move to a decentralized (and global) network economy – but is, in actual
fact, helping to drive it.

David Stoughton

Much of the speculation surrounding Google’s release of Apps for Your Domain for the
personal and small business market, and their future plans to attack Microsoft’s base in
the corporate market, seems to embrace perspectives that are both too short-term and too
narrow in their focus. In fully evaluating the impact of the announcement, it is
important to embrace potential developments over quite a long timeframe; perhaps as long
as five years. The expected rapid growth in key developing markets – especially India and
China – will also be critical.

The immediate response from smaller users is likely to be rapid and extensive,
especially in developing markets. A number of factors combine to drive this. It is
probable that these users follow the generic pattern uncovered by research into software
use. This suggests that they will only ever use a maximum of 40% of the features of
Microsoft Office – and as few as 16% on a regular basis. In India, where I have had first
hand experience, the mind-set is that the [Microsoft] product is far too expensive by
local standards and that they are being asked to pay for redundant functionality. They
think it’s functionality that western users may value, but in India they don’t

Indeed, for sole traders and small businesses, office software is potentially their
single biggest start-up cost. As a result the vast majority of copies, perhaps as high as
90%, are pirated. Something similar, I’m sure, can be found in China. And all personal
users – even in the West – find prices challenging. Additionally, since they have no
supply chain management systems and few customer facing tools, small businesses value
collaboration highly – but are unlikely in the extreme to buy a more expensive version of
MS Office, that also requires server software and potentially more hardware.

On the other hand, as most pundits note, large corporate users are not likely to
convert in a hurry. Most of the reasons have been thoroughly aired – security, off-line
functionality, connectivity and interoperability, as well as sheer corporate inertia. So,
like Sun with Star Office and others before them, Google is not likely to make much of an
immediate dent. But, unlike Sun which has no installed base among small users,
strategically Google doesn’t need to; they just need to demonstrate the possibility. The
capture of a substantial portion of the small business market, coupled with their
demonstrable ability to evolve products rapidly, will be enough. Because this is a
classic disruptive play and Microsoft is following the classic strategy of the

“Microsoft…plans to sell higher-priced versions of Office plus add-on servers with
built-in collaboration features when it launches Office 2007 later this year”, reports
Aaron Ricadela in
. To be explicit, Microsoft will continue to add functionality – and
incidentally price – in order to outflank their opponents. The result, unless Microsoft
changes course, is a foregone conclusion. 

Small businesses are tomorrow’s bigger (and legally compliant) customers, and the
speed of growth in India and China can be spectacular. By the time they grow up, Google’s
apps will have evolved with them and be perfectly adequate for their needs. The same
inertia that holds back big business now will then start to work in Google’s favour.
Meanwhile the inexorably rising Total Cost of Ownership associated with Microsoft
products, and the fact that individuals in any given organisation will progressively
adopt Google apps for personal use, will prompt some big organisations to migrate.
Already many governments question whether the cost of Microsoft based systems is
justifiable – so a real, viable alternative will make this an issue of good governance
for commercial organisations too. Given the current strategic landscape, I don’t see the
result as being in doubt – the only unpredictable factor is the timeframe.

Scott Karp

The war between Google and Microsoft will have many fronts; including functionality,
standards and interoperability – but I don’t think any of those will be decisive factors.
The real battle will be fought over data – where it is stored, how it is secured, who
owns it, and who can access it. Blogger Om Malik, who launched a media company around his
blog Gigaom.com, looked at deploying Google Apps for Your domain for his own company –
but then he read Google’s privacy
and decided

When it comes to data, Google’s reputation among businesses is an increasing
liability. Growing concern over click fraud, Google’s new inscrutable landing page
quality score, and Google’s constantly changing search algorithms that impact so many
small businesses – has left many companies feeling like Google is just one big black box.
Google has given companies little reason to believe or trust that it’s playing fair with
the data inside that box. As a result, there has been a strong current of resistance to
adopting Google’s Checkout feature – according to a recent
informal survey
, “81% of the online retailers indicated that they probably will not
implement Google Checkout primarily due to the concern about ceding customer ownership to
Google.” The concern here is not just over who controls the customer relationship, but
who controls the data. I did my own informal survey of advertisers at the recent Search
Engine Strategies conference, and the universal view I heard was an adamant refusal to
hand over sales data to Google – for fear that Google will exploit the data to raise
search advertising prices.

This is not exactly the reputation that a Software-as-a-Service provider wants to
have. I’ve heard the argument that many businesses probably do a poor job securing their
data, so they would probably be better off letting a third party secure their data for
them – just like they put their cash in the bank. But I think perceptions will be the key
driver of business decisions to adopt Google’ SaaS offering – businesses need to feel
that their data is not only safe from theft, but also safe from exploitation by the
company that is storing it. I think many companies will see the full adoption of an SaaS
model for all their business applications akin to handing Google the keys to the

For the smallest companies and in emerging markets, as David points out, this may be
less of an issue – so Google may well be able to secure a foothold. But as concerns over
data and privacy grow, Google may hit a wall where entrenchment in Microsoft platforms is
driven by more than just inertia.

In addition to control of data, the other big issue that will limit Google and the
SaaS model is offline access. With Boeing having recently thrown in the towel on its
in-flight Internet service, the inability of business travelers to access SaaS
applications while on a plane will be huge barrier. One day in the not too distant
future, the entire world will be covered with a blanket of Internet access – everything
and everywhere will be wired – but we’ve still got a long way to go. Just as computing
can’t function without ubiquitous electricity, Google can’t displace Microsoft’s client
application model until Internet access is also ubiquitous.

Taewoo Danny Kim

This move by Google has been a long time coming. Google has been building up its stock
of online office applications, so it’s no surprise they’re aiming to do an office suite.
It also means the much anticipated Google vs. Microsoft battle is upon us. My take on
this is quite different from many though: rather than a battle between Google’s apps vs.
Microsoft Office for the throne, I think if anything this is going to produce a more
complementary relationship. I’ve been using Google’s online apps along with Microsoft
Office 2007 beta version – and I have concluded that Google’s apps won’t be able to catch
up with the ease and deep functionalities of MS Office. On the other hand, even with the
use of SharePoint, I don’t think Microsoft can offer the same level of collaboration as
Google. Accordingly, they’ll have different customer sectors and play nicely alongside
each other.

However, I still view this as a battle over the computing platform – a much larger and
fundamental one. Google’s ambition lies not only in organizing all the world’s
information, but also making the entire application world an online one. Meanwhile
Microsoft is still trying to maximize the opportunity to “connect” its PC platform to the
Web. Google has garnered many benefits by being a pioneer in the online app world –
search, collaboration, mash-ups, etc. On the other hand, it is also the first one to face
the various problems of the online app world too. Control over data, privacy, and
reliability of the services are a few such examples. Microsoft, as usual, is cautiously
watching from behind and taking its steps slowly.

Just like Microsoft, which needs to transform its image into a “consumer-friendly”
company (as we talked about in the Zune article) Google also has to transform its image
from a mere search company into an “application company” too. After all, as noted in this BusinessWeek
, Google has not been overly successful at creating applications. Moreover
Google’s competitors, most notably Microsoft, are catching up in the online app world –
following the exploration already done by Google. For example, Richard noted in his blog
that Windows Live is now among the top 10 ranked
sites on Alexa

This is a gigantic shift we’re witnessing right now in the software industry. There
are a great number of problems and issues to be solved; but there are even more
opportunities to be explored. What’s exciting is not just the Google vs. Microsoft
battle, as many of us can easily fall prey to pondering, but rather that there’s so many
things that could happen – and most of that is going to depend on Internet technology and
imagination. Of course more competition and more changes are always good for us
consumers, because we’ll have more options and innovative products to use!

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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