Google Makes Its Move: Office 2.0

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Google has deployed the first pieces of its upcoming Office suite. They’ve launched Google Apps for your Domain, a set of Google services targeted to small and mid sized companies. With the new service, companies can use Gmail, Talk, Calendar and Page Creator under a single control panel. Applications and data will be hosted by Google, for free, with ad support.

And that’s just the first move. According to Aaron Ricadela at InformationWeek, Google will soon add their Writely and Spreadsheet products to the suite, add collaboration tools that will work across platforms, and even provide technical support.

And when Gmail users send office documents, Google will prompt them to open the documents in Google’s new suite, allowing for collaboration and, presumably, making money from advertising.

This is a bold move by Google. They are striking hard at a nearly $12 billion/year Microsoft revenue stream. And they are clearly trying to get this out the door fast, in anticipation of Microsoft Office 2007, which will include collaboration features for businesses (as does Office Live, announced last year).

Customers clearly want Office documents stored on servers instead of, or in addition to, local storage. And while it’s not clear that there is great demand yet for online creation of documents (the experience is still nowhere near as good as the desktop products), the ability to collaborate on reviewing and editing documents is important, and this must occur online to be effective.

Google and Microsoft are approaching this from very different positions. Google has a clean slate but has to play catch up in customer acquisition and in building compelling functionality. And while Microsoft has a lock on customers at this point, their need to protect a huge revenue stream puts them at a distinct disadvantage. Who wins this fight could very easily be settled in the next 12 months, after Office 2007 and Vista hit the market and Google fleshes out its offering. But regardless if the result is that the cost of creating office based documents falls, the consumer wins.

And while all of this is going on, Zoho is quietly building a really excellent online office suite of its own. Any of the other big guys could also quickly enter this game with a timely acquisition.

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