Microsoft Puts Office in the "Cloud", Confronts Google

[Parsad]

Going after Google head-on.  Cheers!

 

http://www.cnbc.com/id/43557789

[Liberty]

The way I see it, it's more Google that went after Microsoft's core business by creating all these 'Office' apps in the cloud a few years ago, and now Microsoft is trying to play catch up by doing the same.

 

In my day job, we've been doing everything (shared documents, spreadsheets) in Google apps for a few years and it's been working well. I'm curious to see what Microsoft's offering is like, and if it's going to eat into their traditional Office revenue stream because they have to make it cheaper to compete with what is already offered online. I'm also curious to see if microsoft will make it work as well on all platforms and in all browsers or if IE and Windows will be preferred citizens in that ecosystem.

[Liberty]

The way I see it, Microsoft should keep dominating with Office 'power users' for the foreseeable future, but Google has a good opportunity with the vast majority of people who never used more than 5% of the features in Office (and probably couldn't even find most of them in the menus and sub-menus...).

 

Most of the moat around Office was based on two things:

 

1) Switching costs: If you wanted to try something else, you had to buy one or many licenses for hundreds or thousands of dollars, install it with floppy disks or CDs, and then learn a new interface and retrain your people.

 

2) Network effect: For the longest time, files saved in one word processor couldn't be opened in another, so it was normal for everybody to standardize on the most popular format. MS changed formats every couple years and kept them as opaque and undocumented as possible to make it as hard as possible to reverse-engineer them.

 

But now... With cloud, apps switching costs are much lower, you can sample the competition with a few clicks. Google has free versions of all its apps, and they have only the most used features so the interface is very intuitive and you basically can start using it right away. It can also open MS Office documents and save files in Office formats, making the network effect less important.

 

So I'm sure Office will be a great business for a while longer, but the moat is eroding, and I doubt they'll keep their margins.

 

While the majority of users of office suite products don't use more features than what's included in Google apps, Google will no doubt keep adding more advanced features as it keeps pushing for more enterprise customers. I think it was smart of GOOG to start downmarket and move up as mindshare builds. It has much more chances of success than coming out with an unproven full-featured office suite and trying to sell it to big corporations for hundreds of dollars per license from the start... Google Docs launched publicly in 2007. Who knows what it'll look like in 2015.

[Guest VAL9000]

I'm curious to see what Microsoft's offering is like, and if it's going to eat into their traditional Office revenue stream because they have to make it cheaper to compete with what is already offered online.

I doubt there will be much in the way of cannibalizing sales.  The price points are too similar.  Office today costs $280 for a single shot.  Office 365 is $6/user/mo.  Office is released once every 3 years.  $6 x 3 x 12 is $216.  Not bad considering most small businesses / end users often pirate this software anyway.  This is the web-only version.  You can also spend way more on better versions (e.g. $16/mo gets you traditional Office 2010 client-side).

 

Google Apps is $5/user/mo for web-only.  The question is if the extra $1 is worth it.  No idea but I'm sure the market will figure it out.

 

I'm also curious to see if microsoft will make it work as well on all platforms and in all browsers or if IE and Windows will be preferred citizens in that ecosystem.

 

This we'll have to see.  MSFT frequently fails at cross-platform support, but they've been doing a better job lately.  The revised Live applications are an indicator of this.  Does anyone have an opinion on Office 2011 for Mac?  I've never used it.

 

Currently the support for mobile sounds like it sucks, but I haven't used it.

 

Liberty, I agree with you that the cloud based model that Google is pursuing with Apps is going to get a lot better, but to be honest it kinda sucks right now.  The problem that Google is facing is that they're trying to build a generic web application that competes with a rich desktop application.  They need to find different factors to compete on, and at this they are failing.  They really should be leveraging their strengths, but so far they're just trying to beat Office at its own game.  Where are the innovative features in Google Apps that make my life easier?  Other than collaboration, they don't exist.  Google can take Apps anywhere they want, but they've chosen to spend their time trying to emulate their competitor.  It's a little bit sad.  These guys are supposed to be the next software visionaries, and they're stuck in the past with their eyes on Office.

 

[Liberty]

Interesting post, as always, VAL.

 

I think you might be underestimating Google Apps, though, because we're so used to that model by now. Think of a world where it never came out; would microsoft be doing Office 365? Would the average person be using as many web apps? I think it helped open the door wide for what's happening right now, and I think that giving people exactly what they require to do most of what they need to do was a good strategy. Office software is pretty mature - it's been around for decades - and I doubt that there are many big breakthroughs left to be had except for collaboration, which as you pointed out Google (and the startups it bought) helped make happen. I think if they had offered a completely different interface just for the sake of being different, that would have been a disservice to their users and limited their appeal.

 

Google's mission is to organize the world's information and to make it accessible to as many people as possible. Google Apps does that well; your documents are searchable, available from any computer you have, you always have the latest version of the software and your docs are secured in the cloud (Google has a much better track record than any small user at backing up and preventing security breaches). Before that people were putting their files on USB drives and emailing them to themselves, trying to keep track of versions, losing them in crashes, loading software that takes hundreds of megs of RAM just to write a letter, all of this while their web browser was always open anyway. In fact, many people probably still do that, but I have my important docs in a bookmark folder in my browser. At anytime I can open them with one click from any computer (because Chrome syncs bookmarks too..). Much better than the old model IMHO.

 

I'm not saying it's perfect, but I'm not sure what I would have done differently...

[Parsad]

So you're telling me, for a small monthly fee, I can use less powerful, laggy applications over the internet where speed is limited by my capped internet connection, rather than a much more robust application on my less compromising hard-drive which is only limited by the speed of my quad core processor?

 

Partly correct, but remember that hardware appliances like the iPad and Chrome laptops have no lag when booting the computer.  Because the software is online, you can flip open your laptop and it fires within seconds. 

 

- No 45 second to 90 second start. 

- No limitations from your hard-drive speed.

- No limitations of memory due to the processor firing up programs.

 

Google introduced online docs many years ago. Does anyone actually use those products to any material extent?

 

MSFT seems to be fighting for a piece of something that doesnt matter.

 

True.  But it will get better.  I like gmail and if Outlook had the same synchronization and abilities, then I would go back to Outlook only.  Google will improve the other apps as well.  But now users have a choice...Google's lesser quality apps in the cloud, or Microsoft's dominant office software in the cloud.  I think if they execute correctly, many will stick with Microsoft.  Google has their work cut out for them, as does Microsoft...and let's not forget about Apple either.  Cheers!

[biaggio]

$6/mo/user,that's a sweet deal for MSFT vs $280 one time purchase. MSFT gets rid of piracy problem.

 

I don t see the average person buying into this. I could +may be wrong.

[prunes]

If I'm only an occasional user, can I cancel and resubscribe whenever I like?

[NormR]

So you're telling me, for a small monthly fee, I can use less powerful, laggy applications over the internet where speed is limited by my capped internet connection, rather than a much more robust application on my less compromising hard-drive which is only limited by the speed of my quad core processor?

 

Bingo.  I've found the google spreadsheet to be a very poor substitute for even light work.  Open Office is by far a stronger competitor. 

[Parsad]

$6/mo/user,that's a sweet deal for MSFT vs $280 one time purchase. MSFT gets rid of piracy problem.

 

I don t see the average person buying into this. I could +may be wrong.

 

Well I must be above "average" then, as I probably will subscribe to this on my new laptop.   ;D  

 

I'm still using my old laptop, even though I bought a new one in December...simply because I've been too lazy to buy software and install it, then transfer everything over.  Now I'll probably just buy Office 365 and transfer everything over directly from our office server.  Cheers!

[DCG]

People talk about 'Cloud computing' like its something revolutionary. I can't even believe it's been given its own name and industry. All cloud is is a sub par application that you need the internet to connect to, and pay a monthly fee for, but for some reason its managed to be talked about as the next big thing?

 

So you're telling me, for a small monthly fee, I can use less powerful, laggy applications over the internet where speed is limited by my capped internet connection, rather than a much more robust application on my less compromising hard-drive which is only limited by the speed of my quad core processor?

 

Anon and /b/tards are going to have a field day.

 

Google introduced online docs many years ago. Does anyone actually use those products to any material extent?

 

MSFT seems to be fighting for a piece of something that doesnt matter.

 

 

 

er..yeah...a lot of people use Google Docs. I've been using it exclusively over MS Office for a few years. Its free for individuals (and not sure how Google can tell when businesses are using it). I don't remember the amount of businesses Google has said use Google Docs, but remember it being a decent amount. And for probably 99% of users, Google Docs really isn't noticeably less powerful than Office programs. And it's really not buggy or laggy at all. There are several features in Google Docs not even available in MS Office programs as well (instant save, great Google search options, easy sharing options etc).

 

It's not something that doesn't matter. It's something that most people can't really fathom how it has taken Microsoft so long in catching up to companies like Google and Open Office with this (although that's just how this company has been run by Balmer).  

 

I can log on to any computer or device connected to the internet to view and edit my documents with Google Docs. I'm actually even sitting on a computer in a hotel 'business center' right now and just pulled up a couple files on Google Docs before coming to this site.

 

I'm not saying Google Docs is perfect..its not..but they make improvements to it pretty frequently (much more frequently than Microsoft, and updates are pushed out by Google without people having to do a single thing, compared to dealing with Microsoft's often horrible upgrade issues). There are some features in MS Office that are not in Google Docs, but again, most people don't use those features.

 

[goldfinger]

$6/mo/user,that's a sweet deal for MSFT vs $280 one time purchase. MSFT gets rid of piracy problem.

 

I don t see the average person buying into this. I could +may be wrong.

 

Well I must be above "average" then, as I probably will subscribe to this on my new laptop.   ;D  

 

I'm still using my old laptop, even though I bought a new one in December...simply because I've been too lazy to buy software and install it, then transfer everything over.  Now I'll probably just buy Office 365 and transfer everything over directly from our office server.  Cheers!

 

Same here. I have a new laptop and I had access to free office. Now because of legacy (people send me documents) and because of my own needs I am going to by the subscription...

[tengen]

If you want to have a one stop solution for all your basic business software needs (email, calendar, web site, office suite) with integrated user management, offerings like MS 365 or Google Apps look pretty compelling. Instead of comparing the monthly cost to the cost of buying MS Office, I would compare it with the cost of owning an office suite + exchange server + web site + other stuff. You might wind up paying a similar amount for the licensing fees (but I actually think 365 would be cheaper) but you'd save a lot of hassle.

 

By the way, if all you want to do is edit some documents/spreadsheets, and maybe share access with a few people, you can use Google Documents for free with your personal gmail account. Google Apps is also free for organizations with 10 or fewer users (the limit was 50 until a few months ago).

 

[biaggio]

 

Well I must be above "average" then, as I probably will subscribe to this on my new laptop.   ;D  

 

There is no doubt that you are. (Way above average )

[Parsad]

I took a look at this thing and I really like it.  Google is going to have to really upgrade their software, since the Microsoft 365 products are pretty much Office products with all the features and capabilities.  $7/month is pretty damn good...Canadian price...not sure why we pay more than American's! 

 

Alnesh and I used to use a Microsoft program called "Groove" when we first started Corner Market Capital, and it worked really well as it synced the files between our computers and server whenever anyone worked on something.  Google took it one step further by removing the software altogether, and now Microsoft has done the same thing. 

 

You've got Coke and Pepsi fighting it out...is there room for both?  What about Cadbury-Schweppes (Apple)?  ;D  Cheers! 

[goldfinger]

interesting take that msft is going head on with goog. the reality is that msft is utterly dominant in the office category and took their time to roll out something substantive and get it right. goog is barely on their radar.

 

In between Bing - Facebook - Yahoo, Skype + Comcast, Mango, Office 365 and other projects, I would say that Google and MSFT are in a war of many fronts!

[bargainman]

 

very true but in office apps you might say msft is GB and goog is Argentina.

 

And you could say the opposite in search and ads.