Analysis: Why Google May Succeed Where Others Have Failed

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The search giant's release of free spreadsheets and word processors has been a hit with small businesses. But will it play in larger enterprises?

First it was Gmail—a free web-based service that changed how conversations were organized, made them easy to search, and, with its speed and 1 gigabyte storage allotment, blew away the competition. Then came the lightweight spreadsheet and word processing programs.

Earlier this year, Google chief executive Eric Schmidt said the company was working on an application that would offer many PowerPoint-like features—and a lot of PowerPoint's look and feel.

If it seemed obvious that Google was intent on developing a set of products that could substitute for traditional Microsoft productivity applications, it seemed less obvious how Google thought it could succeed in this. History has been cruel to companies that have challenged Microsoft in its core business (see Netscape circa 1996-1998), and Google didn't even have the benefit of starting off as a conventional software company.

But did that really matter? As Google has introduced its hosted applications—none of them flashy, but all of them performing as promised and in ways that simplify collaboration—and as it has announced acquisitions that have strengthened its technical foundation (such as the pending purchase of Postini, an e-mail security company, for $625 million), it has become harder to write off Google as nothing more than a search service.

On the contrary, what seems certain to some analysts, seven months after the company released its for-pay edition of Google Apps, is that it is going to be successful in this initiative. The only questions are how successful, with whom, and how Microsoft—never one to shrink from a challenge—will respond.

This article was originally published on 2007-08-22
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