News

Google's spreadsheet only the tip of the iceberg

• By John K. Waters
• June 12, 2006

Google's launch last week of a new Web-based spreadsheet application generated waves of headlines, though the app is unlikely to cause more than a ripple in the Microsoft-dominated office productivity market, at least in the short term. But Google's steady march into the applications business has serious long-term implications for developers and IT managers on the way software will be delivered in the not-to-distant future.

"This isn't something revolutionary that everybody needs to shift gears to focus on right now," says Kyle McNabb, senior analysts at Forrester Research. "But it does speak to how the market will evolve from the current, primarily thick-client model to delivery of software-as-a-service (SaaS). Google recognizes that the way software has traditionally been delivered can be changed."

The latest addition to the Mountain View, CA-based search company's growing list of office productivity applications, Google Spreadsheet, is set to be released Tuesday in a limited test edition on a first-come, first-served basis. The company considers the application a work in progress; Jonathan Rochelle, product manager of the new application, said that Google is still smoothing out kinks in the program and developing additional features.

The spreadsheet announcement came less than three months after Google bought Silicon Valley-based Upstart and added that company's Writerly word processor to its list of Web-based office apps. That list now includes Gmail, Google Page Creator and Google Calendar.

Although Google's applications pose no direct threat to Microsoft's market dominance, they're useful to the company because they provide another way to reach consumers with their advertising, McNabb explains. "That's their primary revenue model and that's not going to change overnight," he says.

But these online apps also provide Google with a foot in the enterprise IT door.

"Clearly right now, no enterprise would look at this spreadsheet, or the word processor, or the calendar and say, yes, these are the applications I want all my employees using," McNabb says. "There's just not enough there, yet. However, the more Google offers in this area, the better it positions itself, through the habits of consumers who use its services, to influence enterprise IT behavior. You'll see it when employees start saying, I use the Google stuff at home, why can't I use it here at work?"

McNabb also points to the success of software-as-a-service companies like Salesforce.com as further evidence of changes to come. "The more successes we see with companies like Salesforce at delivering true services to the enterprise," the greater will be a company's willingness to change from the practice of licensing software, bringing it in internally," and installing it on everyone's desktop or laptop, to subscribing to external services," he says.

And Google isn't the only company offering browser-based office apps. iNetOffice, for example, has been providing its iNetWord online document and Web-page editor for several years.

"Software as a service is a big win for users," Tom Snyder, president and founder of iNetOffice Inc. "Microsoft proved that in the 90s with Hotmail. With the maturity and capability of the browser, we're just seeing the tip of the iceberg. You can expect to see rapid innovation over the next few years."

But perhaps the greatest significance of Google's moves in this area is its likely influence on Microsoft's own product strategy. "Microsoft is very conscious of the impact that Google can have," McNabb says. "The company is very familiar with this model of getting consumers to influence the behavior of enterprise IT. Guess who figured that model out in the first place? They know how it works, and I don't think they've forgotten it. You won't see the company abandon its client software, but you'll probably see it embrace server-side computing. In future releases of Office, you'll get the usual client software, but you may also get features that allow you to select different services you want within that client, and to pay for them on a subscription basis."

McNabb's prediction appears to be right on the money. Speaking on Sunday at the Microsoft's TechEd user conference in Boston, Microsoft CTO Ray Ozzie gave attendees a peek at his company's plan to provide "a seamless, blended client-server-services approach," to provide services that "complement and extend Windows and Office applications to the Internet."

Ozzie, who is best-known as the creator of Lotus Notes, and later founded peer-to-peer software maker Groove Networks, joined Microsoft last year. He is widely considered the driving force behind the company's online services push.

"We are at the beginning of the period when your view of enterprise services and Internet services become enmeshed and intertwined for the better," Ozzie said. "It's my job to ensure that Microsoft will be a leader in helping its partners and customers through this next transformation."

Microsoft has been dabbling in SaaS with its Windows Live consumer portal; last month, the company released Windows Live OneCare, an automated PC-care service designed to help consumers protect and maintain their computers. Now the company is poised to use Windows Live to provide what Ozzie has called a “software plus services” platform. “Under the name 'Live' we’ll provide a blend of desktop software, server software and service offerings,” he said.

“We are about to witness another era of technology disruption for all our customers that will bring about some fundamental changes in the way we design and deliver products and services,” Ozzie said.