FSN: Google squares up to Microsoft for Office applications

Google squares up to Microsoft for Office applications

28th May 2007
As Google looks to make inroads into the provision of desktop applications with its very own suite of products Microsoft is looking over its shoulder. But should it be worried and will businesses make the switch. Mark Dye , FSN's contributing editor reports in part one of a three part series.

It was bound to happen. Google vs Microsoft in a game of chess as the search engine specialist bids for a greater share of the “Office” business software market currently owned by the Gates behemoth.

It's an interesting game though and one in which the consumer could be the real winner as Google apparently starts to pressure Microsoft into lowering prices on Microsoft Office, put the company on the backfoot and eat into what amounts to a $12bn a year revenue stream for the company. The hook here is the low cost and the promise of a web-based collaborative working environment. Put simply, Google is offering low-cost, zero maintenance software that can be accessed via the web. Sounds nice doesn't it?

Back in August the company launched its original bundle of joy in the form of Google Apps, something which was a hit with some small to medium businesses (SMBs), schools and universities alike for those very reasons.

Now it is hoping that its Google Apps Premier Edition, designed for small and large businesses, will prove an alluring draw at $50 per account per year countrywide. For that users will get Gmail, Google Calendar, Google Talk instant messaging and voice-over-IP (VoIP), and very soon a presentation application similar to Powerpoint following the company's recent acquisition of Tonic Systems.

But what does it all really mean? Well according to Richard Edwards, senior research analyst, at the Butler Group, it's still early days with the Google offerings reminding him somewhat of WordPerfect 5.0 and lending weight to the theory that Office is not going to be replaced over night. "Indeed, I don't [even] see Office 2007 making much of a dent on the market for another 3 or 4 years at least," he says.

And although Google is offering its "applications" as on-demand services for those who do not want to pay for desktop tools, there is widespread feeling that most employees who use such applications need constant access to them and do not want to rely on being online every time they update a document or access a spreadsheet.

"Also, unlike database based applications like Customer Relationship Management (CRM), SMBs will be more concerned about the security of documents being stored remotely," explains Bob Tarzey, service director, Quocirca. "This is probably unjustified but likely to worry some anyway, especially financial services organisations."

Tarzey also points to the other free options like Open Office, which can run on Windows, for the cost conscious SMB.

Furthermore, Microsoft tools are far and away the most widely used, accounting for more than 90% plus amongst most businesses with OpenOffice in second place – its strongest position being the very small organisations.

"It should not be overlooked that the value of Microsoft tools is not just at the desktop but also the collaborative power provided via the backend, Sharepoint, Exchange and things like LCS which are proving the biggest drivers for 2007 adoption," adds Tarzey.

"If I were Microsoft then I'd have a back-up plan just in case," says Edwards, "but I wouldn't want to use it unless my back was up against the wall."

He thinks there might be a web-based edition of Microsoft Works waiting in the wings, but feels that Microsoft would not want to release it unless they really felt they had to as it would undoubtedly impact upon sales of Office.

The company has already responded to the move into its domain with LiveOffice, although has received mixed reviews from certain analysts.

Tarzey views this as a 'just in case' move at the moment, seeing the time for on-demand office tools as being that bit further down the line.

Microsoft will certainly need to keep its pricing competitive, but at $50 per user for the ad-free version coming from the Google corner it is going to be challenging.

"There is also the issue of end user skills," adds Tarzey. "SMBs can hire staff Microsoft ready, but this should not be over estimated, [as] other products can be picked up pretty fast, [and] they all work in the same basic way."

Although Google is offering service level agreements (SLAs) of 99.9% uptime with 24/7 technical support, zero maintenance is only part of the bigger picture. Obviously it will be welcomed by enterprises who have encountered problems with Office, but this is tempered by those that wish to retain more of an element of control about their business rather than going down the managed services route.

"This is a big selling point for on-demand in general especially for SMBs. It might well be that the sweet spot for on-demand desktops is transactional workers such as those in call centres," says Tarzey.

Then there's user training, interoperability and integration to take into account.

"Office is an integration point for so many business apps these days, from CRM to enterprise resource planning (ERP)," confirms Edwards. "Google will have to team up with Salesforce.com if they want to make inroads, but I can't see it happening just yet."

Squarely aimed at corporates with application programming interfaces that businesses can use to integrate it with their own applications Google Apps Premier Edition comes in cheap when compared to a standalone copy of Microsoft's Professional Edition. However, before you all start running to the shop, the company doesn't offer information on its volume licensing prices, but Tarzey says “we can safely assume 20-30% for 10 users here, meaning Microsoft is going to equal about 6 years of Google subs and over 10 years, when accounting for things like upgrades, there may not be a lot in it.”

Clearly there's much to think on here and those companies which are heavily regulated will want to keep very tight control over their IT infrastructure for obvious reasons, one reason switching office products may not rank highly ranking high on the to-do list of IT managers and CIOs.

"However, IT managers should actively review all high profile Web initiatives in order to discover their 'secret sauce'," adds Edwards. "Corporate IT departments have a lot to learn when in comes to building compelling enterprise apps, and so evaluating the likes of Google Apps is no bad thing."

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