Google mounted a direct challenge to Microsoft a few years ago when it developed Google Docs, a free, online suite of productivity tools. The suite includes a word processor that functions as a streamlined version of Word, a PowerPoint-style presentation tool, and a spreadsheet.
Google even provides the option to save, export, or download its documents with Microsoft's own .doc, .xls, or .ppt file extensions.
Apparently, Microsoft is feeling some pressure now to compete in the arena of free, web-based applications, because it will begin offering an online version of its Office suite of applications.
The free, online products will include the Office word processing application, the Excel spreadsheet, PowerPoint presentation software, and OneNote message pad. They'll be available directly through Microsoft's Windows Live portal and launch directly within a user's browser.Office Web will make its debut in the first half of 2010, Information Week reports.
The move allows Microsoft to protect its flank from Web-based software from Google and from free, open source-based offerings, such as IBM (NYSE: IBM)'s Lotus Symphony product.
Capossela said he doesn't believe Office Web will cannibalize the desktop version of Office, sales of which to consumers were down 30 percent in Microsoft's most recent quarter. "We haven't taken the approach where the Web apps are a duplication of the client apps," said Capossela. "We try to make them incredibly good for the device you are using," he added.
For instance, the Office Web version of PowerPoint will not contain the desktop version's high-performance video editing tools. "If you use Office on your PC, you're going to want to take full advantage of what your PC can do," said Capossela. The Web apps on the other hand will offer some features that won't be found on the desktop versions, such as the ability to embed tags into documents and post them on blogs.
I don't see how this development can fail to inflict a wound, possibly a fatal one, on the market position of Microsoft's Office software.
Most people never delve deeply enough into any application to perform anything but the most basic functions. Most people use Word as a typewriter. They use PowerPoint to create basic presentations for meetings and annoying chain e-mails. They use Excel for... whatever it is people use spreadsheets for. The really advanced capabilities go unused and probably unnoticed by the overwhelming majority of users.
So, the moment that the basic functions of the Office suite become available online for free, it will be the beginning of the end of the software brand known as Microsoft Office.
The vast majority of people who use Office do so on computers they bought that came with it pre-installed. Computer makers purchase the software from the company and install it before shipping. The bundling of software with its Windows OS has actually been a key to Microsoft's market dominance. That, and the fact that the stuff works really well for what people want to do with it, such as type, make basic presentations, and... do whatever it is that people do with spreadsheets.
As soon as computer users no longer need Office on their machines to perform routine tasks, it is inevitable that computer makers will start to wonder why, exactly, they are paying so much money to Microsoft for the right to pre-install the software. The rise of netbooks is a natural evolutionary step for the computer industry as people spend more of their computer lives online, rather than on their hard drives. The proliferation of web-based applications will only accelerate.
Google Docs was a visionary move on the part of that company. The proof of this is the fact that Microsoft is now creating its own version Google Docs, which began as Google's version of Office.
Microsoft will not give up the ghost on the Office product easily. It will almost certainly make the bundling of Office an all-or-nothing condition of licensing its Windows OS to computer makers. But that will be a holding action, at best. As even more reliable, easy-to-use productivity tools become available online, computer makers will almost certainly start to wonder if Windows is worth the cost. Open-source operating systems such as Ubuntu, or Google's own Chrome OS might start to look attractive to Dell, HP, and others.
It is not overstating the case to say that with the development of Office Web, Microsoft is contributing to the eventual demise of its own software brand.