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PC World just posted an article saying that their money is on Microsoft (NASDAQ:MSFT) in the Microsoft--Google Office App War. I put my money on Google (NASDAQ:GOOG).

PC World notes that Microsoft Office is used by 80% of businesses and that Microsoft is responding to Google by offering an online version of Microsoft Office for free. PC World is focused on the wrong question. They're looking at trees and have not stepped back to see the forest.

Microsoft is begrudgingly offering one of its greatest profit drivers for FREE but Google's list of FREE is long. Google is prepared to offer consumers access to millions of books, FREE. It is prepared to offer consumers a FREE Google Voice phone number. It is prepared to offer all sorts of FREE software that will be used inside of FREE Google Waves.

It makes all the sense in the world for consumers to buy Android based phones because the FREE software and unfettered access to FREE texting, FREE Internet phone calls and other FREE services, makes the total price of service a bargain over competing brands. The story in regard to the coming battle between Windows and Chrome is similar. Big businesses will continue to buy Windows for a long while but consumers will buy lower priced computers that come equipped with the FREE operating system.

My guess is that the computer consumer/business split is in the neighborhood of 70/30. In other words, given the choice between FREE Chrome and EXPENSIVE Windows, I suspect that the majority of computers will ultimately be Chrome based. Apple (NASDAQ:AAPL) will get its share and there might be various Linus Kernels underneath the Chrome based machines but Windows finally has serious competition.

Last week, a conversion tool became available to move Lotus Notes files to Google. One can already move ones Outlook files to Google. Even more interesting, one can now keep ones Outlook files but send the output to one's Google accounts. In other words, Google does not have to "steal" Microsoft and IBM customers to keep growing its market share. If the consumer can save money on his home computer but still send work files to it, then the rational consumer will save money. The rational consumer will "reside" in the Google "world" while going for occasional visits to the Microsoft "world".

Let me make it clear. I am not projecting the downfall of Microsoft. I am projecting that Google will take a considerable market share in a number of areas where Microsoft is dominant. Chances are that a lot of other Internet companies will be hit by the blast sent by Google toward Microsoft and by Microsoft toward Google. The most recent example is that Microsoft has fired its Bling "cannon" at Google but it appears to have hit Yahoo (NASDAQ:YHOO) more than Google. Consumers should be careful about tying themselves too closely to one of the many Internet companies that may be the Internet equivalent of the Stanley Steamer Automobile. There are many good products "out there", but some have great advantages over the others. Many a small company is in direct competiton with Microsoft and Google. My money is on Google.

Source: Google Will Win the Application War Against Microsoft