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February 22, 2007

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King Troll

Henry do you have a full time job bro? What you do for a living man?

Henry Blodget

Believe it or not, yes. Research, writing, and consulting.

Piaw Na

"No company in history has dominated the hearts and minds of both marketers and IT buyers, although several have tried."

Didn't Microsoft succeed for awhile? I remember when the doctor next to me on an airplane told me he thought that the government should be giving Microsoft a medal for unifying software standards rather than trying to sue it for anti-trust.

And nobody ever got fired for buying Microsoft is definitely the mantra today.

Victor

This is nothing but a feint. Google isn't doing this to hurt MS, but to distract them. From what I've read, Google bought a tiny online word processing company (only a few employees), and isn't really attacking this seriously. They may take a few low end users, but this isn't a business model they're pursuing with any real interest. As long as they have MS focussed on defending their crown jewels (as opposed to go after Google's jugular in ads) Google is happy.

MS is in a difficult position because they see a threat, and have to consider putting their products online in a service model. They have to be very careful that in doing this they don't cannibalize their most valuable cash cow. However, realistically speaking, the threat is only a specter.


Robert Frescas

Check these guys out:

http://news.congoo.com

john

This will be a huge business for google. Google CEO was quoted to say that they have a contract with Egypt to provide the google app suite for 3 million college students and 5 million high school students.

Ray Baxter

Selling and servicing technology solutions is a fundamentally different business than selling and providing advertising solutions, and will eventually require the creation of an entirely new sales and service organization.

I think that you are making a mistaken comparison; servicing office tools is not fundamentally different from servicing web pages and e-mail messages. They all require a distributed server grid, user authentication, and front end software to extract the documents from the server and present them to the user. Google has shown that they are incredibly able to perform in these areas. In particular, their ability to make constant incremental improvements gives them flexibility that Microsoft can only dream about. Microsoft releases a new version of Office every 2-4 years and has to deal with awkward compatibility problems. Google can release a new version every hour and because the documents are on their servers, they can solve their compatibility problems easily.

The other disruptive feature of Google's offerings is that your documents will be available from everywhere. If you have tried to keep a Word document in sync as you work on it from home, the office and on the road, you know how problematic that can be. Google's tools can potentially solve that problem, and the related problems of sharing and collaborating.

I doubt whether this convenience and simplicity is sufficient to push today's Fortune 500 IT managers to adopt Google's productivity tools on their own, but their competitors, their new hires and their stockholders will.

Victor: I disagree that this is a feint. I think Google's plan is what they say it is, "Google's mission is to organize the world's information and make it universally accessible and useful." The world's information includes everyone's spreadsheets and documents.

cfJeff

Google Apps means serious business. Check out their enterprise customer list: http://www.google.com/a/help/intl/en/admins/customers.html

Procter & Gamble, GE, Google (duh), Salesforce.com, Prudential Preferred Properties, Mondadori, Essilor, L'Oreal, Nexans, Impelsys, Inc. as well as Arizona State University and Swedish Police and others.

The last nail in Microsoft's coffin would be if the general public got up in arms about the U.S. federal and State Governments wasting money on M.S. products. Give that a few years after they have all been using Google Apps for free.

City Controller

I work at the City of Cleveland. We will never switch out of Microsoft. Next year we will be upgrading to the new MS products and stay with them for years and years. Oh any by the way, our main computer contract is Dell. We will never switch them either.

Local governments will be the last to switch.

We do use Peoplesoft for Financial Software though and will for years.

tclimb

It goes without saying that you are extremely bright. Happy to see you came around on G v. M. Considering how fast web products can be adopted (remember hotmail?), don't you think you could be seriously over-estimating the time it could take for G to steal market share?

Neal S. Lachman


I never cared much to research or read about Google's version of Office. But if it is an ONLINE application it will have a limited growth potential - most likely in correlation of an X % of the Broadband industry, which is to reach half a billion in 2012. Thus, if only 10% uses this service the growth is limited to MAX 50 million users - IN THE NEXT 5 YEARS! Big deal!

Ok, then there is the enterprise/business solution (I don't know anything about that businessmodel either... so I am going to make a wild guess):

If 10% of the Broadband connectivity is commercial it means 50 million. If only 10% of them uses Google's service it translates to a market of 5 million max. Ok, 5 million businesses with an average of 5 users = 50 Million.

Total market for Google by 2012 onward is 100 million, in increments of course because we aren't there yet (at 500M broadband users).

If we want to commafuck, we can also note that the non-commercial market is 10% of 90% of 500M (because 10% is estimated to be commercial).

I bet MS is scared shitless! (yeah right)

Neal S. Lachman

Guys, it is late, so forgive me my miscalculation ;-)

5 x 5 million commercial users = 25 million (and not 50 million).

Anders Kargaard Jensen

Finally you get it Henry.. ;)

As I wrote 1½ years ago - 24th of September 2005:

"Google and Microsoft are both making sure, that the software and the online industry are merging, because both are working their way into the other industry. Google is currently dominant in the online industry, Microsoft is in the software industry and has been for decades - one player will be dominant in the new merged industry in a couple of years from now. I think that free software is Google's chance of gaining leadership, it certainly would hurt Microsoft severely. Microsoft's chance is gaining leadership in search, before Google can finance free software. But with the current status of market share and product quality in search, I wouldn't be betting my money with Microsoft."

See the rest at:
http://investinsearch.blogspot.com/2005_09_01_archive.html

Thanks for a great blog - I read it often!

Neal S. Lachman

Anders,

Your vision is great, but would you -and any other person who believes in Google's chances- care to elaborate on/ substantiate your claim how MS can be hurt severely. What are these fantastic visions based on?

Besides the ones known from models (such as Michael Porters' 5 forces), I think a lot of factors play a part when one wants to make any type of projections or estimates of any kind of business, including but not limited to the following:

1) Market size = limited to the number of online users. While G's market "only" can include online people (as far as I know), Microsoft's market/sales opportunity equals all of PC sales.

2) Product = Does it has comparable features? Is it convenient to use?

3) Competition = MS first and foremost. But every onther start-up that could bring a similar product would take away share from Google's market, which is currently non-existent anyway. The dent made by existing and future competitors will be felt by Google in an order of magnitude compared to what MS will feel, simply because MS has 450 million units sold.

4) Quality = Is it really worth switching for? Will it be a 100+% "progress" or do I have to compromise in some way whatsoever?

5) Customer Profile = Maybe those who go for freebies are the ones that do NOT pay for MS Office anyway. I am referring to those who use pirated versions, which I think is most likely.

In this case the disruptive force -or as I think at least a huge part of it- is maybe only virtual because MS doesn't make any money by these customers anyway. In reality people would most likely still like to use a professional and reliable product.

While we think that free is attractive, we must not forget that we use Office as a productivity and efficiency tool and not just to fool around. If it was something of less importance, something free would make sense. The potential gets worse if G asks money, no matter at what "low-cost". Do I want to use something of great quality and for which I have to pay, or do I go for a "start-up" technology?

I think MS Office is considered a necessary, worthwile expense for the majority of its current customer base, and that the G's offering doesn't make sense in terms of quality and conveniece (except maybe to MS haters). Even if it does, is the whole "experience" worth the switch? And even if MS is considered evil for some reason, maybe it is in the case of OS and Office a necessary one.

King Troll

Neal , how's that $500 trillion fund going? Did you build your new city and laserspeed internet network yet?

Neal S. Lachman

Wow, KT wrote a whole sentence without cussing. You're going to get there bro.

John Doe

Neal S. Lachman, tclimb etc. please be advised. I can guarantee you guys that Google's announcement is sending shockwawes through the entire MS organisation. Never before has MS faced a more skilled and determined opponent than Google. A person on this blog claims that could merely be a diversion manouevre by Google to distract MS, but not at all. Google is slowly but steadily gaining on MS' SMSP business and if they get into that lucrative business area we are doomed because most of our revenue is coming from that business area. On all other fronts we are trailing Google, due to, as I see, several critical things where management is above all the most important thing. So guys, Google will move forward and as long as their services and products are webbased we don't stand a chance in getting even close to them.

DonDodge

Henry, Microsoft takes this challenge very seriously. Ray Ozzie has a grand vision for the Client/Server/Services continuum, and is already building out the infrastructure and products to make it happen.

Office Live and Windows Live is available now, but there is a LOT more coming. Remember those $500 million data centers that Microsoft is building? They are part of the strategy too.

As you point out, business cutomers are far more demanding than free consumer users. Microsoft has built a level of trust with business and IT people that Google has yet to earn.

I wrote a blog that goes deeper into the Microsoft strategy. See http://dondodge.typepad.com/the_next_big_thing/2007/02/why_microsoft_w.html

Anders Kargaard Jensen

Hi Neal

I think you are missing the important points here..

1) Five years from now - everyone is going to online everywhere.. or close.. so this argument is not really forward thinking

2) G is now all about features instead of new products - Sergey Brin stressed this a year ago - the new focus

3) Great for G if other companies also create online software - the important for G is not to have market share here - but to see Microsoft loose paying clients to ANY free software be it G or someone else

4) In some respects you get a better product with Google - in others you don't yet - but believe me - they invest here - and they have quite some clever people working there

5) G's offering is not actually free in the enterprise model - so don't know what you are talking about

MS Office will be king of the hill the next 5 years or a bit more... but at no more than 10 years from now MS's MAJOR cashcow will be in pain.. -> MS has far less money to invest in catching up with Google in search -> Google leaves the table as winner of the struggle of tech giants.. and will rule search and software!

Great day to all of you!! :)

Steve Morsa

Henry, as I proffered over at Don's site:

Ho hum...more undeserved front page "news" media attention for another boring, uninspired, and minimally useful Google offering that will likely never even cover their bandwidth, storage, "customer service" (an area "algorithms-only please" Google's notoriously poor at providing) and other operational costs...

...and any company--of any size--foolish enough to entrust important content, information, data, and communications to them may someday pay dearly for their pennywise, pound foolish decision.

Just wait until the news reports start coming out when businesses' entire records get wiped out...and the govt and legal eagles start grabbing--quickly and with great ease--these same records for all kinds of purposes...

I know I'll never use it.

If this "offering" was from any company other than Google, does anyone really believe that anybody but the tech blogs would be reporting on it?

And the effect "Apps" will have on the existing office suite marketplace?

Virtually nil...nada...zilch.

Google Apps? D.O.A. R.I.P.

...and the biggest coming threat to media-darling, 95%+ paid search income dependent Google?

Pending patent #11/250,908...aka Paid Match

Neal S. Lachman

Hilarious piece of great info on Google Office:

Read the Fineprint of Google Office:

http://blogs.zdnet.com/BTL/?p=4537&tag=nl.e539

An Ex-RD

Very interesting comments. I tend to echo that MS has nothing to worry about with Google office apps. Now or in 5 years. Contrary to an early comment, it is very easy to work on an office doc in multiple locations. It's called a thumb drive, or email, or VPN or "share my PC."

Anybody can do it and you always have control of your document(s). It is never in control of a Google, who has obtuse privacy policies with respect to YOUR info, and who can lose your data with no repercussions at all. No sane business person is going to bet their business on such a EULA.

Ryan

I own a small business and recently toyed with the idea of switching over to Google Apps, instead of using MS office. I probably would have done it, but it doesn't seem to have all of the features necessary even for a small business like mine. I instead opted for Office 2007... Cost was an issue, but so was the ability to make flyers and do most of my marketing in house with clipart and such already bult into MS Word.

It was not an easy call for me to make - If Google can refine the office products to compete on a more "mature" level with MS Office, I would switch in the future. I am going to be incorporating their other Apps into my small business and use those. I don't think I'll pay for the premium version until I see more improvements. I think it is a step in the right direction, and time will tell if it lasts. They do have some big names using it currently.

an observer

The natural extension of Google Apps are offline counterparts integrated within web browser via plug-ins or extensions, maybe even a Firefox-OpenOffice hybrid. Such possibility is not difficult/costly to achieve. I'm guessing Google have them in beta already.

Cool Guy

We are used to using many basic as well as advanced features of office. How can you go from not using these features. Again, for most business, productivity is main issue compare to cost. If it saves 3 to 5 man hour per person ($20 per hour, total $100) and increases the productivity by same amount, why would you want to switch from Microsoft to Google. Wordperfect tried giving their product free with computer purchase. It did not work. I got free wordperfect and I hated idea of learning way of doing things everything differently which reduces the productivity.
Also, how long will it take to download heavily loaded feature rich product even on broadband connection. Cheap is not always best and in most business even when money is tight, highest productivity is the biggest concern.
BTW, what did happen to google finance section? Is anyone using it anymore. They tried to steal spotlight from Yahoo but seems like only thing Google got was free press coverage.

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