The FutureBy Baselinemag | Posted 2007-08-22 Email Print
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?
That the answer to Koplowitz's question isn't clear is a tribute to what Google has accomplished. As of this writing, Google has a cash hoard of $12.5 billion and a stock-market value of $159 billion, in both cases more than half the level of Microsoft. Nonetheless, the thing that likely makes Microsoft management nervous is the momentum Google has.
Last year, its eighth since being founded, Google passed the $10 billion sales mark—a feat that Microsoft needed 22 years to accomplish. If you took Google as it exists today and made it a unit of Microsoft, it would be Microsoft's third-biggest standalone business, with an excellent chance of surpassing Microsoft's operating-system revenue in the next quarter or two. (A side-by-side comparison of the two companies' assets appears on the last page of this article.)
Google also has some intangible assets, notably its lofty philosophy (e.g., "the need for information crosses all borders" and "do no evil") and its reputation for technical brilliance. That reputation has transformed Google into what IBM was in the 1970s and Microsoft was in the 1980s—a magnet for talented engineers.
Also, Google—as the first place students go for information—is becoming woven into the fabric of life in a way that Microsoft isn't. "This is where time is working for them," says Lars Plougmann of Headshift, a London-based consulting firm. "They're in the process of charming an entire generation of people using computers in a broadband world."
Still, it is a lot to believe that the world's biggest enterprises will simply throw Microsoft out the door in favor of Google. "The fact that a product like Excel is really tied into the business processes of a company is extremely important," says Richard McAniff, a corporate vice president at Microsoft. "One I.T. person once told me everything comes through Excel in one form or another."
Indeed, Microsoft has become part of the infrastructure at many companies, the fossil fuel on which all things run. So, while some people may think it's time for alternative forms of energy, the how and when of getting there are questions.
To the extent that there is a transition in which Google gains ground, many observers believe it will be gradual. Adrian Sannier, the top technology officer at Arizona State University, where more than 65,000 students and faculty now use Google Apps, says he can envision a world in which companies use Microsoft products to author documents, and Google to collaborate on them. "You could imagine an enterprise where the number of Microsoft licenses you had to buy was much smaller," he points out. "Maybe the accounting department gets full-blown Excel but no one else does."
Even Microsoft executives accept this possibility. "I think there's a tremendous opportunity for lots of people to also participate in this space," says Office-overseer McAniff. "It's not winner-take-all."
That's a surprisingly conciliatory tone for a Microsoft executive. And if he's right, Google Apps may end up being the biggest impediment Microsoft has ever faced.