On Google Vs. Microsoft and Cloud Computing

The New York Times this week published an article about the mounting competition between Microsoft and Google over office productivity software. The article outlines how Microsoft, long famous for and unrivaled in its Office suite of products like Word and Excel, is now faced with competition from Google’s simpler but free web-based Google Apps. According to the NYT, Google says Google Apps is being adopted by thousands of businesses, and Microsoft heartily disagrees and contends that it’s not threatened.

Regardless of who’s winning, at the heart of the rivalry is the issue of cloud computing, which shifts software installed on a single computer to “the cloud” – that is, bases it on the web so it’s accessible from any computer. Here’s how the NYT describes it:

The growing confrontation between Google and Microsoft promises to be an epic business battle. It is likely to shape the prosperity and progress of both companies, and also inform how consumers and corporations work, shop, communicate and go about their digital lives. Google sees all of this happening on remote servers in faraway data centers, accessible over the Web by an array of wired and wireless devices — a setup known as cloud computing. Microsoft sees a Web future as well, but one whose center of gravity remains firmly tethered to its desktop PC software. Therein lies the conflict.

It’s clear both contenders have cloud-computing strategies, though Google’s on the offensive while Microsoft’s on the defensive, and both have their flaws. While Google Apps lives totally online, some of its offerings, particularly when it comes to Google Docs’s word-processing and spreadsheets, just can’t compete with Microsoft Office yet. They’re simply too simple for many businesses. Microsoft, on the other hand, faces the challenge of offering web-based software to stay competitive without cannibalizing existing MS Office sales. Office Live is the MS Office online arm, and another interesting answer for Microsoft might be infiltrating social networks to stay relevant to younger, individual users.

But does cloud computing even matter? The blog Microsoft Watch reported that more than 73% of PC users surveyed had never heard of Google Docs, and notes (emphasis mine):

Ninety-four percent of U.S. consumers have never heard of Web-based productivity suite alternatives. A mere 0.5 percent have substituted Web-based productivity suites for desktop software such as Microsoft Office. Chris Swenson, NPD’s director of Software Industry Analysis, described the 0.5 percent figure as being a “bit high.” Swenson predicted worldwide usage to be even lower than the United States.

Marshall Kirkpatrick at Read/Write Web points out that the same study cited by Microsoft Watch also shows that 20% of users have heard of web-based applications – a number that’s actually relatively high, considering that Google Apps has only existed for about a year.

Just yesterday, Google cut a deal with an ISP, WildBlue, to “include many of Google’s popular web services” on its homepage. So it’s too soon to write off Google’s web-based apps – or cloud computing, in general – either for individuals or for corporations.

[Full disclosure: Microsoft is a client of Reprise Media.]

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