Henry Blodget, the former Wall Street analyst says "Google paints bulls eye on Microsoft" While Larry Dignan at ZDnet says "Will you trust Google with your data?" Everyone is talking about Google Apps and how they are taking on Microsoft Outlook and Office. I think Google Apps really compete with OpenOffice, Zoho, and WikiCalc.
Is this another example of The Innovators Dilemma? Clayton Christensen of the Harvard Business School wrote the book. Christensen explores why successful market leading companies fail when faced with simpler, cheaper, less functional products that disrupt the market. See this post for an in depth review of the book and this one for real life examples from my past.
Google can do no wrong. The press heaps praise on anything they do. If Google Apps were released by any other company they would be panned as immature and irrelevant. OpenOffice is far better and it is free. Zoho has a better, more complete suite. WikiCalc is a far better spreadsheet written by Dan Bricklin, the original inventor of VisiCalc. All of these products are better than Google Apps...and none of them compare to Microsoft Outlook and Microsoft Office. Even Microsoft Works is far better, and more complete, than Google Apps.
But this is exactly the kind of thinking that leads to The Innovators Dilemma trap. Maybe at other companies, but not at Microsoft. Microsoft takes this threat very seriously. Ray Ozzie has a grand vision for the Client/Server/Services continuum, and is already building out the infrastructure and products to make it happen.
Henry Blodget has a clear view of where things are today, but doesn't see what Microsoft is doing to build a seamless transition from Microsoft Office to Office Live. This quote from Henry sums it up best;
The current status is that Google's offerings are fine for low-end use but won't start meaningfully cannibalizing Microsoft's sales for years. No self-respecting IT manager at a Fortune 500 company is suddenly going to throw out the global standard and bet his or her job on the sideline business of an Internet media company. Over the years, a parade of web and technology titans--AOL, Oracle, Sun, Yahoo--have tried to upend parts of the Redmond monopoly, and all have found the crossover from their core business to PC software far harder than it looked. And if Google is serious about stealing some of Microsoft's sales and support customers, it will undoubtedly find this transition hard, too.
At the same time, by targeting Microsoft's crown jewels, Google is risking not only failure but its own monopolistic dominance of its core business--search. Selling and servicing technology solutions is a fundamentally different business than selling and providing advertising solutions, and will eventually require the creation of an entirely new sales and service organization. No company in history has dominated the hearts and minds of both marketers and IT buyers, although several have tried. Even with Google's awesome talents and power, therefore, success is far from guaranteed.
Microsoft Office is a huge and profitable business, over $12 billion in sales and over 60% operating margins. Office is one of the three crown jewels at Microsoft. The other two $10 Billion plus jewels are Windows and Servers & Tools.
Microsoft will do everything possible to preserve these businesses while transitioning to the new Live strategy. The technical vision is to give users the best of both worlds. That is the business strategy too. No Innovators Dilemma here.
This is more than a technology battle, it is a battle of perceptions. And right now Google has the perception of being the innovator, even though there is nothing new in Google Apps. Not to worry, remember when Nintendo dominated the game console business? Xbox came out of no where and is now the percieved innovation leader. Never count Microsoft out.