Google Apps Upgrade Poses Threat to Microsoft Office

Google is pushing further into the communication and collaboration applications market with a major upgrade of Google Apps, a hosted suite for organizations of all sizes that analysts say could soon become a real competitor to Microsoft Office.

On Thursday, Google will introduce a Google Apps version that, for a fee, offers guaranteed uptime, IT management tools, technical support, increased e-mail storage, and integration with the Docs & Spreadsheets word-processing and spreadsheet applications, as well as BlackBerry support for Gmail.

Indeed, Google Apps represents a new, hosted approach for productivity suites, a market ruled by Office, which is mostly desktop software. Despite security and privacy concerns over storing applications and data on a third-party data center, organizations are increasingly adopting hosted models, because the vendor stores applications on its own data center and thus frees IT departments from spending time and money on hardware and software maintenance.

Google acknowledges that Google Apps doesn’t match the broad set of features currently in Office, which has an installed base of about 450 million users. Google Apps needs a presentation application like Office’s PowerPoint, and to boost its support for offline work beyond its basic capabilities to import and export files from Docs & Spreadsheets, analysts say.

Still, Microsoft must better articulate the value of Office Live, which lacks hosted versions of core Office applications like Word and Excel, said analyst Rebecca Wettemann of Nucleus Research. With the improvements in Internet connectivity, it’s natural for organizations to evaluate hosted suites like Google Apps as alternatives to packaged software like Office, she said. In a recent survey, Nucleus found that 51 percent of organizations use some on-demand applications for things like CRM, project management, content management, e-commerce and collaboration, Wettemann said

The Standard and Education editions are also getting enhanced with the Docs & Spreadsheets integration and the BlackBerry support for Gmail.

"This is a very big step forward for Google Apps," said Dave Girouard, vice president and general manager of Google’s enterprise unit. The company plans to add several more applications to the suite before the year is out, and the JotSpot wiki service is a likely candidate, he said.

Google believes the Premier edition can be a good complement to Office, and it sees a big opportunity in organizations that haven’t been able to justify the cost of offering e-mail to some employees, particularly in retail and manufacturing, he said. Google also plans to create an ecosystem of partners and developers around Google Apps.

Forrester Research isn’t telling enterprises to drop Office, but it is recommending that CIOs give Google Apps a serious look, in large measure because Office’s price is high, said analyst Erica Driver. Today, Google Apps is a cheaper alternative to the core Office applications, but eventually it could be a replacement option, as Google grows its capabilities and CIOs get more comfortable with software as a service, she said. "Microsoft has a chance to respond, but this changes the game," Driver said.

-Juan Carlos Perez, IDG News Service (Miami Bureau)