Are Google Apps a productivity killer?

Ed Sim, a venture capitalist, and big investor in SaaS software companies, says "G Office - What's the big deal?"  Phil Windley at ZDnet says "Google Apps doesn't compete".

Ed Sim is a big proponent of Software as a Service, but he is also a constant user of office productivity applications to get his work done. Ed recently sent his laptop in for service and had to live totally on the web for a few weeks. His experience convinced him that client based applications are absolutely vital, and that he lost about 40% of his productivity using just on-line apps. Listen to what Ed says;

While I am huge fan of web-based software and data in the cloud, there is one big problem - you always need to be connected.  For the last two weeks I have been living in a web-based world as I had to send my laptop back for service.  While I could do everything I needed to do, I must admit I was about 60% as productive as usual.  This lack of productivity partly came from clicking and waiting in my web-based Exchange offering and partly due to lots of travel which meant I could do absolutely nothing on the airplane.

In my web-based world, disconnected applications with an on-line component will rule.

At Microsoft we call this the Client /Server / Services continuum. It means having substantially the same experience on-line and offline, and the same features across all devices. Sounds easy, but its not. Keeping data synchronized is difficult, but Microsoft knows how to do it.

Microsoft Outlook Web Access did this about 10 years ago.It has steadily improved, and the same model will be extended to other Microsoft products.

Office Live is available now, but there is a lot more coming. Microsoft is building two $500 million data centers to host the on-line apps. Billions of dollars are already committed to realizing this vision.

How will Google respond? Can they solve the offline problem? Client based applications are far more powerful and responsive even when you do have on-line access. How will Google respond to that?

Google has all the press buzz now, and consumers love them. But business customers are much more demanding, and less susceptible to hype.

This will be a battle of the titans. I wouldn't bet against Microsoft. And yes, I work for Microsoft, so you know where my bet is.

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Comments

[edbong]

On-line vs off-line is a big issues. But is Google Apps not much more a competition to Exchange then it is to Office? I use Outlook and GApps and I dont see the problem...

What I really like is the GApps API... I have been using GApps since August and I think its pretty cool. However there are some issues to look at: http://blogs.zdnet.com/BTL/?p=4537

What I like most though is the API. We are now developing an open source (BUT 100% .NET based) "business application platform" (think salesforce.com). Our first application is working tightly integrated with GOOGLE APPS. Check it out if you are interested.http://www.applicationexchange.com

Unfortunately MS does not have the APIs for its online services to let 3rd parties work well... Google does...

[watever]

Luks like the war begins when firefox3 is released.In Firefox3 offline apps are being well integrated with google it seems.

google apps may not be an office live killer.,but I am sure disruption has already started for a normal webuser like me.I can use gmail for reading spreadsheets on the web!!

btw..why does live mail sucks so bad?
why can't it go contextual?

[The Zero Boss]

I wouldn't bet against MSFT either, Don. (Disclaimer: former employee as of 9 days ago.) But I wouldn't bet FOR them, either. The one area in which Google is eating your lunch is the development cycle. They've mastered rapid iterations of small feature sets that, over the course of a year, add up to a killer app. Microsoft is still by and large stuck with long development and release cycles.

If the rest of the company can learn to emulate the Live Writer team, and if Live and mimic Google's development methodology, you guys have a great chance. If you continue pushing out monolithic releases every few years, Google will eat you alive. The company has shown it can do both desktop and online development, and I don't doubt it's tackling offline mode as we speak. It's much easier for Google to do that, given its solid dev foundation, than it will be for you guys to fix your broken dev processes and decaying corporate culture.

My two cents. :)

[Brian P Halligan]

Interesting thoughts...

I suspect a lot of knowledge workers who currently live in MS Office will try the new GOOG apps and be disappointed. AJAX has made the web experience much better, but a rich client interface is still nice when you "live" in an application.

I suspect GOOG will start picking off some segments of the population who are borderline knowledge workers (people who do not "live" in Office), like nurses, airplane mechanics, etc.

I suspect GOOG will give every purchasing manager at every Fortune 500 company just enough leverage to draw beads of sweat on the major account managers at MSFT. I suspect many of these Fortune 500 companies will start GOOG apps initiatives if for no other reason than to gain leverage in their MSFT contract negotiations.

I suspect that over the next five years the pervasiveness of highspeed wireless connectivity will continue and the gaps that ED Sims describes on airplanes will start to close.

I suspect the $1b/month coming from Msft Office div might be in jeapordy. But, I suspect Microsoft will figure out ways to grow in different dimensions.

[DonDodge]

Brian, I think you are absolutely right on all counts. Broadband and wireless will continue to improve. Google and Firefox will come up with some answers to the offline problem, and they will improve over time.

Microsoft has competed against free products like OpenOffice, StarOffice, and lots of others, and also against Linux, MySQL, JBoss, and others, for a long time. Google is not in the same league as these existing players but they will continue to improve.

Microsoft can compete against "free" and still win. Business buyers have very different requirements than consumers. However, I think you are right that the "threat" of Google will enter into some negotiations.

Mr. Watever, what do you mean by "why can't Live go contextual?" Also, I am curious about how Firefox 3.0 will help offline email, contacts, spreadsheets, word processing, etc. I understand how browsers can cache some things, but how does Firefox deal with contact lists, spreadsheets, etc?

[Sanjay Dalal]

The very fact that SaaS has grown into an established business in itself, and the SaaS innovations disrupting various segments of the software industry, for instance: CRM, Collaboration, Financials, and now personal productivity Apps such as Word processing, Spreadsheets, Presentation, and E-mail has to make Microsoft wary of Google's advances.

Salesforce.com is a great example of the success of SaaS model in CRM industry and its potential to expand into Support, Services, Collaboration and other front office software applications.

Online Banking, Bill pay, Credit Card management and Investment applications such as those provided by e*Trade, Scottrade, Schwab, American Express, major financial banks, etc. have already proven the need and perusal of SaaS applications in the financial industry.

I have only recently begun experimenting with Google Apps including Docs and Spreadsheets. I wrote about the recent launch of Google Apps Premier Edition - the potential of Google causing disruption in the Enterprise market - Google versus Microsoft - the enterprise battle heats up: http://creativityandinnovation.blogspot.com/2007/02/google-versus-microsoft-enterprise.html

For an SMB or a department of Mid-market company, Google Apps Premier Edition can be a good alternative to using Exchange and Microsoft Office. According to Google PR, 100,000 businesses are already leveraging the free versions of Google Apps. The key question is: Can Google find businesses who will be willing to spend $50 per user per year and wanting to place their bet on the SaaS solution? The business model can clearly demonstrate that the effective cost of ownership of Google Apps at $50 per user per year would be economical compared to the cost of the current available solution of Exchange and Office. The total market of SMB and Mid-market company departments is in the tens of millions worldwide. The network, services and billing infrastructure needed to support these businesses on a global scale is complex and a massive undertaking. It appears that Google has taken the time to develop such an infrastructure as it is now able to offer SLAs, 24 x 7 support, and administration/integration capabilities. One area that could be a potential concern for IT is Security, which Google needs to address. Assuming Google can address all of the above, the question then becomes: are these SMBs and departments of mid-market companies ready to embrace Google apps? What about Enterprise? What is the real pain that will compel them to try and evaluate Google apps? Is it cost of ownership, quality, user satisfaction or all of the above? Or is there a major shift already happening in IT, and the positive perception, use and coolness of SaaS, which alone creates a disruption large enough that most companies are just waiting for SaaS services such as Google Apps and Salesforce.com?

The fact that Microsoft is investing in Microsoft data centers, Office Live and Microsoft Live, Client/Service/Services continuum, and hiring of key talent such as Ozzie indicates that Microsoft is indeed hedging its bets on SaaS - after all, Microsoft has tens of billions at stake.

I think has Google has one to one and a half year window to take on Microsoft in the Office and Exchange market with Google Apps. If a large segment of the market adopts and adapts to Google Apps in this time frame, perhaps it can cause Disruptive Innovation. If however this time passes by, Microsoft would have created an equal or better offering than Google Apps to not only protect its own business but potentially expand it. At which point, Google Apps would have been another nice to have Office / Exchange alternative in the same realm as other office suites of yesterday that challenged but could never really equal Microsoft.

How can Google expand this timeframe to capture mindshare and market share, and potentially go all swinging? Perhaps with the acquisition of Salesforce.com. This would provide Google the staying power to compete broadly and deeply against Microsoft for the longer term. Microsoft though is betting that time will be its best ally, and that a majority of the market will not adopt and adapt Google apps before which it has its own offering.

[Sumanth]

Don,
The Client /Server / Services continuum that you speak of sounds interesting - apart from the Excel Server (which at best, is a partial, unidirectional extension of the client application into the web), is there anything that Microsoft has to show indicating progress towards achieving this vision for a seamless user experience?
Given the fact that the present incarnation of "Office Live" has zero tie-in/integration with the desktop applications of the same name, it is probably moot as to who is closer to actualizing this vision - extending online productivity applications to have richer desktop versions that permit offline use might be less of a challenge than investing the effort and time needed to build out and embed web services capabilities into existing stand-alone desktop applications...
Cheers,
Sumanth

[alan patrick]

Don, I totally agree with you today, but...I'd have agreed with you a lot more 5 years ago and will probably disagree 5 years hence.

It takes a lot of things to make SaaS work well, and they are all in states of change now.