IT Curmudgeon

In a previous post I wrote about how Google Docs were providing features such as office document collaboration that can make people very productive.

Even though I love them and use them regularly, I have to admit that the current features in the Google Docs programs have some weaknesses. The interface is clumsy in some respects and it is difficult to format and print wide multi-column documents, for example. These are the kinds of things that should improve over time. These issues certainly haven't stopped me and my colleagues from using it to brainstorm collaboratively from remote locations. It can be an incredibly uplifting experience.

Meanwhile, Microsoft announced that it will release Microsoft Office 2010 with features that will allow web-based collaboration. One person commented that this would "squash Google Docs like a bug." Let's look closely at what the competitive positions of these two giants might really mean in the marketplace.

Microsoft could have offered collaboration capability in MS Office anytime in the last 10 years, since the Internet has become ubiquitous. Collaboration might never have appeared if it weren't for competition in the marketplace from Google Docs. Office productivity software has not had any real competition for many years, resulting in slow (or arguably "no") innovation.

Google Docs can be created or edited free of charge to anyone who has a Google account, and the documents can be viewed by anyone who is invited to see them. This is good for Google, because it builds their brand and gets page views.

A model like that doesn't work for Microsoft, who wants to:

• sell copies of Microsoft Office
• cater to corporate customers
• maintain barriers to entry that keep customers from switching document formats

It appears that Microsoft will offer a server capability in the Office offering that will enable customers to store documents on their own servers and access them from the web. This is exactly the kind of thing that large corporations will like, because they want their documents stored locally to address security concerns, and they have the staff to maintain web servers. Presumably, the Office product would have a built-in copy of IIS for the low-end clients who want to share documents from their desktops.

Google Docs will continue to appeal to small customers who:

• like free stuff
• don't have to install any software
• can easily get their colleagues to collaborate, even outside firewalls

One of the dirty little secrets that Microsoft doesn't want known is that the number of Microsoft Office installations goes down with every new release. This is because the features have not proved valuable enough for customers to upgrade previous installations. Corporations are growing tired of the annual maintenance fees in troubled economic times and some are switching to Open Office. The market share of open source and free service offerings like Google Docs will grow as long as they provide value to customers.

Loyal Microsoft Office fans will be fans forever, but it is clear that Microsoft's office productivity market share is shrinking. It is likely that continued competition from these other sources will force Microsoft to innovate and compete, which will be good for consumers. In terms of the "cloud," Microsoft isn't there yet, and won't be there successfully if they continue to cling to the software licensing revenue model.