Google vs. Microsoft: Software as a Service Battle Heats Up

Google (GOOG) Docs is fully functional and operating right now as a way to get your work done. I've been using it for more than a year, with mostly positive results.

My chief complaints have been:

• A lack of features
• Internet load times slowing down the work a tad

But the features keep trickling in and the load times are short these days. Moreover, the convenience of having my work online and ready for use anywhere I go easily compensates for the temporarily limited feature set and the load times.

Microsoft (MSFT) is not unaware of Google Docs, of course, nor of the talk about it crushing Microsoft's Office franchise. Here at The Kelly Letter, we make no silly claim that Microsoft will disappear soon because of an online word processor from Google. We do, however, think there's a lot at stake and that the application shootout between the two hints at the character of a bigger operating system battle to come.

In this article, I want to focus on software as a service, or SaaS, because that's the battle heating up before our eyes as the larger OS clash looms in the distance.

I sent to subscribers last weekend this mini-overview:

Microsoft Online Services has been around since late last year and was talked about more than a year ago when Steve Ballmer said that there would be an online version of every application made by Microsoft.

Currently, it has three versions:

• Office Live Meeting 2007 - An application that runs meetings over the internet with audio, video, and rich media.
• Exchange Hosted Services - An email management system.
• Microsoft Exchange Online - A more deluxe email management system that "helps give your business the protection it demands, the anywhere access..." blah, blah, blah.

I don't see anything that remotely threatens Google Docs. Live Meeting 2007 looks to be Skype 2001, and the two email systems are just email. Far as I recollect, email has always been an online application and has been pretty well done for more than a decade now.

That's not the whole story from Microsoft, though. It also offers Microsoft Office Live Workspace where you can store and share files with others, including Word, Excel, and PowerPoint files.

I signed up for Office Live and found it to be well done up to a critical point, which I'll get to in a sec. The basic process is simple. Sign up, verify in an email, then get a piece of software that goes into your Microsft Office applications and lets you open from and save to the Office Live web server instead of your local hard drive. On the web server, you can share files just as you can with Google Docs.

Once I uploaded some Word documents to run through some online editing sessions, I ran into that critical point I mentioned. You can't edit and work on the documents online. Huh? You can open them on your computer using the installed Microsoft Office applications and then re-save them to the web server, but you can't actually work on them with the familiar toolbars in online form, as I expected.

That being the case, Office Live is really just a file storage and sharing area online with some additional integration with MS Office. As soon as I'm at an airport or a friend's computer without MS Office, all I can do is look at my list of files on the web server. I can't open them and work on them.

With Google Docs, there is no local hard drive-based component. The entire ball of wax is the GDocs website. You can create, edit, collaborate and all the rest right on the website. Rumor has it that Google is working on some locally installed components to enable users to work offline, but the heart of the system is its ability to work online.

To me, this shows what Microsoft will keep running into as it battles Google. Microsoft's foundation is installed software. It keeps hooking its online endeavors back to that base of locally installed software and, in this case, decided to skip the online functionality entirely.

I won't belittle Microsoft, as many do. Office Live is a fine first effort, and I'm attracted to the idea of being able to use fully featured MS Office software to edit my documents in that familiar environment. I just wish that familiar environment was available to me at the website. I have a feeling it will be someday, but it isn't now.

Who's winning? That's a tough call because the two services differ on the critical point of where the work gets done. They both offer online file storage and sharing, but that's available everywhere on the web and has been for years. The new area we're trying to push into here is how to get work done, not how to share files.

On that point, Google is online and Microsoft is still on the hard drive. Each has advantages, but to me this category is about getting work done online and Google is the clear winner on that point.

Practically speaking, however, most people are not doing the bulk of their work from a remote terminal without applications installed. I don't write my books in spare moments in airport lounges, and I suspect most people get the bulk of their work done at their usual computer, sitting in their usual chair, firing up their usual applications. For the great majority of people, those usual applications are from Microsoft and were paid for. Thus, a lot of folks will be happy to be able to finally back up their documents online and get to them with the same software they've been using all along, the same interface, and benefiting from the same purchase.

Going forward, however, I see this as further evidence of Google's strength against Microsoft. Google will keep innovating free of the burden of backward compatibility, while Microsoft needs to make all of its new initiatives work with its old products, and that will slow it down.

This comparison will go Coke/Pepsi when Microsoft offers online work capabilities and Google offers an offline software pack. That, too, is a Google victory because it's the first company that's ever had a shot at reducing Microsoft to being just one of two equally valid choices.

Up to now, Microsoft has been the only choice.

Comments

[GyZmOjO]

wonder why adobe's buzzword (buzzword.com) does not get mentioned in such match-ups... the strategic imperatives notwithstanding, i guess its the best online word processor out there... wonder how adobe will play this.

[Dennis Byron]

Good summary Jason of both the Microsoft services and the issue.

Live Meeting is not like Skype 2001, it's really is Placeware 1999. And I think you are leaving out Microsoft's live CRM services and all the services based around what it calls Office Live Small Business (competing with NetSuite, SAP BBD, etc.)

As for the issue, I think there may be a generational thing going on here. Guys my age (62), who remember when their applications and data were locked away in a "cloud" (we called it the computer room), want both our apps and our data in our control. (I'm old-fashioned. When I'm forced to sit in an airport lounge, I read Ludlum.) Although not as old as I am, Mundie and Ozzie are of my generation.

You young guys have more confidence in "the cloud" because you don't remember the panic PID messages telling you to close everything down quickly because "the mainframe" is crashing. Hours later when it came back up, there was a pleasant message from IT that said they were happy to inform us that all our work "as of 24 hours ago" was restored to the system.

I haven't researched this generational difference but I sense it might be the defining point in the upcoming battle between MSFT and GOOG.

-- Dennis Byron

[Homer]

The scenario offered is you can tap a stranger's shoulder at an airport, ask to borrow their computer, login to your Google Docs and make changes. If all the PC users who would do this switch to Google Docs, Google Docs should explode into the single-digit market share in no time!
This article also had a lot of: "i never believed the rumors you were beat your wife when you were confronted regarding your affairs" That is, the article said what it didn't believe as the excuse to write some very emotional eye-catching phrases. In other words, the writer wrote what he clearly wishes were true while admitting what he knows to be true.

[MichaelLinehan]

"A lack of features" - no kidding!!!
"Internet load times slowing down the work a tad" - a bit of an understatement!!!

"Moreover, the convenience of having my work online and ready for use anywhere I go"" - a bit more convenient having it in my portable, which operates anywhere anytime... not just when I can get connected to the Internet.

In all this fuss about Google Docs et al, there is almost a desperation to have some "new" and "revolutionary&qu... Just because it's bleeding edge doesn't mean it's a good idea - for now, anyway. Just as I waited for digital cameras to mature, I'll wait for this to mature --- A LOT. I think Dennis (above) has some very good comments about centralized computing.

[Homer]

a bit more convenient having it in my portable, which operates anywhere anytime... not just when I can get connected to the Internet.

valid point

[Jason Kelly]

Thanks everybody for commenting.

Michael, that's a good point about having the apps on your notebook. Hard to get more convenient than that. Also, Dennis, I like what you wrote about the generational difference.

It may not just be generational, though. I've had web servers go down and, while I didn't lose any data, the experience was scary enough to get me backing up everything offline just as I've always done with external hard drives off my PC. So, in a way, the more things change, the more they require the same safety measures.

What I've been looking for is a way to keep my business operating even if I'm on the road and my notebook is stolen. To me, that's the worst case scenario. If email is online, work files are online, the ability work on those work files is online, and so on, then I'm relatively undamaged by the theft.

Hence, my interest in this move toward SaaS.