A discussion about the software industry and their coders

This post continues from my Previous 3 Posts about the Writely acquisition.

Competitive Posturing is the overlooked reason why Google has gathered a set of applications that are similar to those in Microsoft Office. Google will need to respond strongly if sometime after Office Live Microsoft goes ahead and tries to offer:

• Advertisement supported
• Free for consumers
• Tied with MSN Search
• Web-versions of limited-feature Word, Excel, and other Office components

In this scenario, I would expect Google to ramp up the development of its MS Office-like components (even borrow whatever is necessary from OpenOffice) to limit Microsoft’s move beyond Windows desktop. Why? Because, if Microsoft succeeds to grab a large user base through an Ad-supported MS Office and ties this newly acquired user base and Ad-network to MSN search, Google will have lot of trouble on its hands.

In this scenario, Google would have to use its well-oiled paid search network along with Web search and consumer strengths to pummel Microsoft Office back onto Windows desktop – a place where Google has already placed its ammunition in the shape of Google Desktop with much foresight and multiple competitive goals.

Google also knows that Microsoft would have unsteady feet if it ever attempts the above stated scenario. Microsoft’s finance gurus would be worried about sales cannibalization -- losing hundreds of dollars of ensured revenue per box if people decide to use free web-versions of Office products (even if with limited feature set) as most people in reality use only:

1. limited number of Office Applications features and/or
2. 2 or 3 Office applications instead of the entire set that ships in the box. (Word, Excel, PowerPoint, Access, etc)

According to Elizabeth Montalbano, IDG News Service, Dana Gardner, principal analyst for Interarbor Solutions reasons that:

Microsoft...realizes the margins it makes on software licensing are far greater than it can hope to make from services, at least in the near term, and so has no intention of cannibalizing that business as it evolves to support new business models that Web 2.0 presents.

Now, if Google takes advantage of its paid search network by giving special deals for Google Office, Microsoft’s will start feeling the heat. A well orchestrated push-back from Google will thus force Microsoft’s to retreat to its comfort zone on the desktop related boxed sales.

Competitive rationality or common-sense should therefore keep Google and Microsoft out of an Office war in the near future.

post 4 of 4.