Last year, Google launched a suite of online office applications called Google Apps…
Google Apps is an ad supported service that includes IM and email, along with a calendar app, word processor, spreadsheet, web page editor, and personalized portal home page. Despite being fairly basic functionality wise, these applications take advantage of their web pedigree by being natively collaborative with anyone you choose to work with. That is a powerful capability that would normally require significant IT involvement to configure with any of the desktop office suites. It requires a simple configuration when delivered as a service.
Yesterday, Google took the next step in the evolution of these applications.
While there will be a lot of talk about how this service has uptime guarantees, or no ads, or five times the storage compared to the free version – the bigger piece of the story is found behind the scenes.
The “Premier” version of Google Apps has an open API that lets all of these components integrate into a corporate environment. Firms can integrate with internal directories to create a ‘single sign-on’ environment. They can take advantage of third party services (eg.-email archiving) that extend the capabilities of the base service. They are also able to channel GMail messages through a corporate email gateway – a requirement for auditability and compliance in some firms.
These capabilities are the keys that will let Google Apps move beyond individuals and smaller businesses, and get into some of the mid-sized organizations that love the administrative simplicity and web ubiquity of services based applications, but find themselves choosing internal applications because they need to be managed as part of a bigger infrastructure.
This positions Google to start approaching this market effectively…
It is clear that Google is committed to building out this aspect of their business, and establishing themselves in a product area that is now dominated by Microsoft’s Office suite. Office is one of Microsoft’s main revenue engines, and they are in the process of rolling out their latest release – Office 2007. And while Microsoft also offers an online service called Office Live, it is designed as a set of web tools that compliment the capabilities found in their desktop suite. It isn’t a web based version of Office’s applications.
Success in this space will require patience from Google, but they are on the right side of the marketplace approach-wise. The transition to a services based delivery model for many business applications is well underway. It will be further accelerated by the increasingly distributed nature of corporations through mergers, outsourcing and telecommuting. Even the largest corporations have shown a willingness to embrace web based applications when they make sense – just look at the success of Salesforce.com. I see this as no longer being a question of ‘if’, but one of ‘when’.
Microsoft has the corporate footprint, web expertise, and product understanding necessary to blunt Google’s ambitions in this space. But they are lacking one critical thing.
Microsoft is like any other global public company. They need to protect the revenue they get from their current products, or suffer the wrath of their investors. And Office represents a massive amount of revenue to Microsoft. This will pressure them into preserving an ‘end-of-life’ model with Office, and could give a competitor like Google the time to establish itself as a credible professional alternative.
Service delivered software is absolutely disruptive. It changes the cost structure not just of the applications being delivered, but also of the structural/organizational aspects needed to support these applications. Microsoft needs to embrace this, and accept the fact that a previously lucrative component of their business may become less so. If they don’t, they risk losing in a big way.
The way WordPerfect lost when Windows came along…