Microsoft is walking an interesting line between the successful but traditional software products of the past—Windows, Office, and so on—and its cloud-based future, which can be seen in such products as Windows Azure, Office 365, and Windows Intune, the cloud-based PC management service. During this time of transition, the company must continue updating and servicing its on-premises solutions while pushing customers, gently, toward more cost-effective and scalable cloud solutions.
This situation is beneficial to customers, since Microsoft often provides an interesting mix of on-premises and hosted solutions, giving customers more choice. So when you look at something like office productivity, you see on-premises products such as Microsoft Office, hosted versions such as the Office Web Apps, and then ancillary solutions such as SharePoint, which also come in both traditional and hosted versions. You can mix and match between these and related solutions, so a customer could provide part of its Exchange infrastructure in house, and part of it could be hosted in the cloud with federation linking the two together for management and integration purposes.
Office is also a great example because it's one of Microsoft's core product lines and a top driver of revenue. In fiscal year 2010, for example, Office revenues represented 30 percent of the company's overall revenues of $62.5 billion, or the same as for Windows. And that fiscal year ended just as Office 2010 was released, a release Microsoft has described as its fastest selling ever at retail.
But we're in this age of transition. And during this time, Microsoft is vulnerable, because users may move on to other hosted office productivity offerings as they make their own transitions to the cloud. One primary competitor here is Google Docs and Google Apps. These solutions haven't received much traction with larger businesses yet, and they won't until they've matured quite a bit. But they're free, and appeal to individuals and very small businesses as a result.
Google, of course, isn't standing still. Recognizing that customers still know and even love Microsoft Office, the company has created various integration tools over the years that bridge the gap between its free and cheap online services and Microsoft's Windows-based software. And this past week, the company delivered a tool called Google Cloud Connect that drives home Google's strategy in this market. Which is: we'll work with what you use today, with an eye toward getting you to migrate away from Office in the future.
It's a good idea. And one that should—and does—alarm Microsoft.
To understand why, it's necessary to examine how Google Cloud Connect differs from the Microsoft approach. Installed on client PCs, Google Cloud Connect is essentially a plug-in that appears as a toolbar in Microsoft Word, Excel, PowerPoint 2003, 2007, and 2010. You must logon to a Google account, and then choose sync settings, which can be automatic or manual. When used in the default automatic sync mode, each Office document you create or edit is automatically saved, or synced, in your Google Docs repository as you work. This is itself a powerful bit of functionality, since it provides crucial off-site backups, essentially, of your documents.
Google Cloud Connect also provides basic collaboration capabilities, allowing multiple users to edit a supported document type simultaneously, but, curiously, only using Microsoft's Office applications. That is, you can't use Google's own cloud-based Google Docs tools to work collaboratively with others using Office.
In fact, you can't use Google Docs at all: Documents synced to Google's servers are stored in Microsoft formats, and while you can convert them to something Google understands for later processing, the results are often terrible, with butchered formatting, even with very basic Word 2010 documents.
And like most Google solutions, Cloud Connect isn't exactly enterprise friendly. It needs to be manually installed on a per-PC basis. So it targets the same individuals and very small businesses as other Google products.
What Google Cloud Connect gets right, in my opinion, is the seamless integration with cloud backup. Even if you never intend to use Google Docs, this is a pretty good way to ensure that each document you work with ends up in the cloud, if only for backup purposes. And while there are some application reliability issues—Word has spazzed out on me temporarily a few times this past week—it does get the job done.
Microsoft is making its own play for hosted productivity. And while its Office Web Apps aren't as full-featured as their traditional counterparts—they're not even available offline, for starters—Microsoft is also offering customers ways to integrate its rich, client-side Office suite in useful ways with various cloud services as an interim step.
So what does Microsoft offer? Does it have a credible response to Cloud Connect?
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