Google Apps vs. Microsoft Office

Miguel Helft at the NYT reports on Google Apps in his article "A Google Package Challenges Microsoft". A brief excerpt:

Google is taking aim at one of Microsoft's most lucrative franchises.

Google Apps, combines two sets of previously available software bundles. One included programs for e-mail, instant messaging, calendars and Web page creation; the other, called Docs and Spreadsheets, included programs to read and edit documents created with Microsoft Word and Excel, the mainstays of Microsoft Office, an $11 billion annual franchise.

Don Dodge thinks the threat to Microsoft is overdone:

Google Apps is missing some fundamental features ... no Powerpoint ... offline usage ... privacy and security ... Users are very demanding and have become accustomed to powerful, intuitive features in Microsoft Office.

Office Excel, Word, and Powerpoint are world class. I have tried using Google Docs and Spreadsheets and it is a frustrating experience. Obvious features that you have come to expect just aren't there.

However, Paul Kedrosky makes good points about small businesses and the low end of the market:

There is a very large group of people out there who need basic apps/sharing/scheduling/email, don't want to have IT support, and are stone-petrified at the idea of installing Exchange.

Those people are not the Excel macro-using, Exchange-expert-paying, Fortune 500s. Matter of fact, most of the latter group will predictably sniff at Google Apps as a mere toy, useless for real world work.

We can all just watch ... [as] the toy-like G Apps chews steadily away at tiny, but growing pieces of MSFT's hide.

Many people have very simple needs with an Office suite. They mostly want to be able to read documents sent to them by others. They occasionally might want to write a letter, edit a document, or add a few numbers in a spreadsheet.

Right now, those people usually buy Microsoft Office. It's just the easiest thing to do. Get Microsoft Office like everyone else and, when someone e-mails you a document, you can read it. No fighting with the dang computer. It all just works.

Now, when someone e-mails me a document, I can just open it inside GMail. Now what is the easiest thing to do? Download the document, launch MS Office, and open it? Or click a link and view it in Google Docs & Spreadsheets?

I suspect a lot of this depends on how well Google Apps handle compatability with Microsoft Office. If there are even minor issues, the "no fighting with the dang computer" will take over, and most people will install Microsoft Office just to have it for the times when they really need it.

If the easiest path becomes Google Apps -- if it all just works -- Microsoft could see the low end of the Office market fall away to the effortless laziness of a Google click.

Update: Henry Blodget writes, "Disruption begins when a dominant market leader has built so much functionality into its core products that it has begun to over-serve its core customers. Some of these customers, realizing that a simpler, cheaper product will do, gradually abandon the old technology."