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June 7, 2006

Google’s online spreadsheet arrives – what do they really mean by that?

Posted by David Hunter at 10:05 AM ET.

As expected, Google announced their online spreadsheet yesterday, or a “limited test” at least, and the buzz is intense. Elinor Mills and Martin LaMonica at CNET offer Google guns for Microsoft:

Google’s launch of a Web-based spreadsheet on Tuesday is further proof that the company is eyeing Microsoft’s Office stronghold. Now the question is: Should Microsoft be worried?

Google on Monday unveiled Google Spreadsheets, an addition to its roster of Web-based productivity applications that includes Google Calendar, launched in April, and Gmail, launched two years ago.

In March, Google acquired Writely, a collaborative word processor that runs in a browser. The company hasn’t made clear its plans for that product and it remains in the beta stage of testing.

Still, as the pieces come together, there’s little doubt that Google is quietly providing Web-based versions of the Office applications upon which Microsoft has built an empire.

Many comments from pundits follow in the article and elsewhere, but let me see if I can parse them out into various schools of thought:

The “It can’t compete with Microsoft Office and/or it’s really an StarOffice/OpenOffice competitor” school:

From the CNET article:

“Google has no clue about what enterprises want or need. Any success they have (with Google Spreadsheets) will come in the consumer market first and then be dragged into the enterprise that way,” said Gartner analyst David Smith. “The real power-users are not going to be giving up their Excel spreadsheets anytime soon.”

JupiterResearch’s Michael Gartenberg:

There have been plenty of alternatives to Excel over the years, some of them even better than Excel that have gotten nowhere. Even online speadsheets are nothing new, there were folks doing this in 1999. Please, tell me what’s changed here?

I’d argue that Google’s stuff is competing more with things like Star Office than Microsoft Office. Hard to understand why they’re doing this and how this helps their search business.

Microsoft’s Don Dodge:

So, while the headlines may scream Google Spreadsheets is competing with Microsoft Office, the more accurate statement is that Google is competing with OpenOffice. Remember, free and open source alternatives to Microsoft Office have been around for a long time. They serve a different segment of the market. Google is competing with Open Source and going after that market.

I doubt that Google is under any illusions about the power of their offerings and comparing them to StarOffice or OpenOffice is just as wrong as comparing them to Microsoft Office. If I had to pick a product to compare the Google collection to, I would vote for Microsoft Works. It’s light duty office functionality for the occasional user and so are Google Spreadsheets, Writely, and Google Calendar. I can easily see OEM’s at some point foregoing a Microsoft Works bundle on a consumer PC and just pointing them to the Google office offerings.

Related, but somewhat different is the “It’s a frontend to Office” school pioneered by Nicholas Carr:

To put it into terms I’ve been using recently, Spreadsheets is a complement to Excel. It actually makes Excel more useful – and hence more valuable. Let me repeat that: Spreadsheets makes Excel more valuable.

So why would Google put out a product that makes its arch-rival’s product more valuable? Because Google doesn’t want to compete with Office. It sees Office as part of the existing landscape, and it wants to build a new layer of functionality on top of that landscape. No one is going to stop buying Office because Google Spreadsheets exists. But what people may well do is use Spreadsheets for sharing Excel and other data online – rather than just emailing Excel files around, as they used to. If Google Spreadsheets competes with a Microsoft product, it competes with a Microsoft product that doesn’t yet exist: Excel Live, Microsoft’s own web interface for Excel data.

While interesting, I can’t quite buy it because I doubt that Google can ever provide anything more than rudimentary Excel compatibility. I would agree that it one-ups the rumored Office Live as opposed to the warmed over bCentral that Microsoft has so far announced under that name, but I’ve just about given up hope on a genuine online Microsoft Office anyhow. Would Microsoft really provide an ad-supported online alternative to one of their cash cows?

Or how about the “It isn’t the spreadsheet, it’s the sharing” school straight from the horse’s mouth:


The Mountain View, California-based company said its free, Web-based application can be shared with up to ten users simultaneously, improving upon a key limitation of Microsoft Corp.’s Excel, the dominant stand-alone spreadsheet.

“Many people already organize information into spreadsheets,” said Jonathan Rochelle, product manager for Google Spreadsheets, as the trial product is known. “Where they are struggling is to share it.”


Rochelle said the program’s main goal is to make it easier for family, friends or co-workers to gain access to the same spreadsheet from different computers at different times, enabling a group of authorized users to add and edit data without having to e-mail attachments back and forth.

“We are totally focused on the sharing aspect,” he said.

Of course, it’s unfair to criticize Excel on sharing since it’s a wholly different sort of application, but Google touting the ease of sharing that is readily provided with a Web application is fine too. Writely has a similar benefit. But this can’t really be any more than an ancillary advantage.

And last but not least is the “Google is messing with Microsoft’s mind” school:

JupiterResearch’s Joe Wilcox:

I predict there will be crisis meetings at Microsoft today. I totally agree with Colleague David Card that “Google is just playing with Microsoft’s (hive) mind. Scaring the troops. Sleight-of-handing the managers.”

Perhaps the real Google competitive threat isn’t any product or products, but the information vendor’s ability to rustle Microsoft corporate paranoia. To get Microsoft chasing Google phantoms, and in the process get Microsoft’s corporate mind off its core business.

Google’s platform approach is similar to Microsoft’s in that the company offers stuff for less, usually free, and reaps money through other means, such as contextual advertising. Google also looks for that good enough threshold, where a product’s features meet enough users’ needs to use it on the Web and wrapped in contextual advertising or search keywords. Potential competition with Microsoft there could be real, if Google could release competing products that provide, say, the 10 percent of features people use 90 percent of the time. But the intent isn’t necessarily to compete with Microsoft, as so many news sites or bloggers seem to believe.

Windows Media Player as a free product bundled with Windows no doubt had a competitive impact on rivals like RealNetworks. And I wouldn’t be surprised if some people at Microsoft saw the negative impact as a good thing. But Microsoft’s primary objective had to be Windows, of enhancing the appeal of the operating system by bundling in other stuff. The other stuff just also happened to compete with other companies. Google’s position is similar. Products like Google Spreadsheet are about making money off the company’s core platform.

Although well aware of the herd behavior of large organizations stampeded by some dimly perceived lightning strike, I’m less enamored with the theory of Google intentionally disrupting Microsoft than I am with the idea expressed in the latter part of the quote. All of Google’s office offerings are freebies, or loss leaders if you will, that bring in users or keep them in the Google family of Web properties. If some marginal buyers opt out of Microsoft Works or Microsoft Office, it’s merely a side benefit.

Of course, there’s a final consideration, well expressed by Henry Blodget:

If the goal is simply a portal strategy–soak up more of a user’s computer time, and you’ll capture a greater percentage of their searches–then, fine. But the ROI on a free spreadsheet designed to capture more of a user’s time is way lower than that of a successful tweak to a search algorithm. Google’s overall ROI, therefore, should continue to fall.

True enough, although one has to wonder how easy “successful tweaks to a search engine” are to come by these days.

Filed under Coopetition, Google, Microsoft, Microsoft Works, Office, Office Live,

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4 Responses to “Google’s online spreadsheet arrives – what do they really mean by that?”

  1. No worries about Office Live cutting into the Office cash flow -- Microsoft News Tracker Says:

    [...] I also asked LeBlond if Google’s foray into productivity applications is of any concern to Microsoft. His response: “That’s not what keeps me up at night,” he said. As I mentioned the other day, I’d given up on seeing any Web-based version of Office and taking LeBlond’s comments at face value, Office Live seems destined to remain a warmed over bCentral. Filed under Office, Coopetition, Google, Office Live, Microsoft   [Permalink] [...]

  2. Google to fill online office hand with Thumbstacks for presentations? -- Microsoft News Tracker Says:

    [...] They just introduced Google Spreadsheets and purchased Writely for word processing, so all Google needs to round out their online office suite is online presentation software. Well, that can be fixed if you have the cash and Google certainly does. Steve Rubel points to a report at ITWire that has Gartner Group predicting a Google purchase of Thumbstacks or the equivalent before the end of the year. Filed under Office, Coopetition, Google, Microsoft   [Permalink] [...]

  3. Microsoft Works to go (Office) Live? -- Microsoft News Tracker Says:

    [...] Back when Google started rolling out its online office tools, I observed that all the criticism that online tools lacked the power of Microsoft Office were missing the point: If I had to pick a product to compare the Google collection to, I would vote for Microsoft Works. It’s light duty office functionality for the occasional user and so are Google Spreadsheets, Writely, and Google Calendar. I can easily see OEMs at some point foregoing a Microsoft Works bundle on a consumer PC and just pointing them to the Google office offerings. [...]

  4. Google spiffs up free online office software offering -- Microsoft News Tracker Says:

    [...] Google just launched the latest iteration in their free online office offerings called Docs & Spreadsheets. Separately they already had the Writely word processor  (relaunched in August) and were testing Google Spreadsheets, but now they have combined them and Michael Arrington at TechCrunch got a sneak preview: It integrates the previously separate Writely and Spreadsheet product silos into a single control panel and admin area (the previous sites for those products redirect to This is not a deep product integration, but it is another shot across the bow of Microsoft Office. I had an unexpected opportunity to meet the team and take a look at the product earlier today along with a few other bloggers. [...]

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