After more than a decade and a half of putting out its office productivity suite, there is no question that Microsoft owns the office — at least the big, corporate office, at any rate. The company's Office package (which, ironically, was first released for the Apple Macintosh), came out in 1990 and now has well over 90 per cent of the market for desktop office productivity software.
According to recent estimates, Office accounts for more than 30 per cent of Microsoft's annual revenue of more than $40-billion (U.S.) and about 50 per cent of its profit, which last year hit $13-billion.
Obviously, that kind of monolithic hold on a market doesn't just evaporate overnight. The Office suite has become so much a part of how large companies do business that it's difficult, if not impossible, to imagine them suddenly turning their backs on all the millions of dollars spent on Microsoft software.
While Microsoft's products have a stranglehold on the desktop market for installed software, however, they have virtually no presence in the growing Web-based software business (although the company said earlier this year that it plans to offer online versions of its second-tier Microsoft Works software), and that gives an online company like Google a distinct advantage.
Is the search engine company going to bring Microsoft Office to its knees? Hardly. What is more likely is that individuals and companies will start to use Google and other online office suite services (including Zoho Office and Thinkfree) as an extension of their existing work methods; in other words, as a kind of add-on to Microsoft's desktop-only products.
To the extent that working online — and the ability to collaborate in real time, which is one benefit of Web-based software — becomes more popular, however, Google could gain some important momentum over its larger rival.
For now, at least, it's obvious that Google's moves into the office space aren't causing any sleepless nights at Microsoft. One of the senior executives in charge of the Office division (or the “Knowledge Worker” unit, as it is called) recently scoffed at the idea that Google, or anyone else, would be able to offer anything online that could compete with Microsoft.
Antoine Leblond, a 17-year veteran who is now co-leader of the Office group, was responding last week to comments from reporters about Google's new “Google Docs” online document and spreadsheet creation and editing services. Although one of the most common criticisms of Office is that most people only use a fraction of its features, “the simple argument that ‘this is good enough for 90 per cent of what we do' has fallen on its face over and over and over again,” Mr. Leblond said. “When it comes to mission critical things and key pieces of how people run their businesses, the threshold is higher.”
And while Google's online services might be free, Mr. Leblond went on to say, “free software has been around for a while now and it turns out free doesn't trump the software doing what people need it to do.”
Mr. Leblond is right that free Office software has been around for a while. OpenOffice, which is the “open source” version of Sun's StarOffice suite, has been publicly available for years, and it can import and export almost any Microsoft Office document with very little trouble. So why don't more companies or individuals use it instead of Microsoft's products? Because they usually get a PC that already has the Office suite on it, and it works just fine.
Even Google chief executive officer Eric Schmidt isn't saying that he wants to take Microsoft on in a head-to-head battle for Office supremacy. “We don't call it an office suite. It's not targeted at the [Microsoft] Office — we never made that claim,” Mr. Schmidt said at the recent Web 2.0 conference in San Francisco. “We are not arguing it is an Office replacement, but a different way to manage information. I don't think it replaces Office. The focus we have is casual sharing and usage, and it has one benefit — it is free.”
By pitching his Web office suite as something that doesn't directly compete with Microsoft, Mr. Schmidt is clearly being pragmatic. It rarely pays to confront a freight train head on. But he is also focusing Google's efforts on a piece of the market where the software giant is a relatively minor player, and that could bring a far larger pay off over the longer term.
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