Google on the Desktop

Russell Shaw has some great analysis on what Google could be up to. It seems logical based on his analysis that we will soon see Google competing with Microsoft Office. It would further seem that this software could indeed be free meaning Microsoft’s cash cow is in jeopardy of being slaughtered.

Ouch. There are few choices you have when your competition takes something you charge for and makes it free. Microsoft has undercut the prices of so many rivals over the years and has given away software that others charge for that they may have put more companies out of business than the bubble bursting.

Anyone remember paid VocalTec Internet Telephony software being put away by Microsoft’s NetMeeting?

Google is now in the position to return this favor.

It looks as if the search leader is on track to become a bigger and bigger part of our software purchases and in so doing further reinforcing their dominance on the desktop. That is if they actually charge anything — which I doubt. Microsoft by now should have a superior search engine to Google in order to compete effectively. It has been years and they have earmarked billions to defeat Google. To date there is no defeat… Not even a product worthy of calling it a competitor to Google’s superior search algorithms.

In the mean time, Google is launching services and striking deals faster than an e-mail joke is forwarded throughout your social circle.

Microsoft has gotten too big in the opinion of many. They have an unprecedented amount of talented people but let’s face it they will lose a war with Google if they are slower than their Silicon Valley based rival.

If you are a Microsoft investor you have to worry that Google will start rolling out software attacking your core staples and then go after the operating system itself. What if Google were to merge with Oracle for example? What would that do to the competition with Microsoft? Where would Microsoft hide and how could they respond? Oracle has so many types of software in its arsenal, that Microsoft would be in deep trouble as Google would help fill the missing pieces.

As I have said repeatedly, Microsoft has some of the smartest people I have ever met working for them but it is all about speed today. How many agreements can you make? How much positive PR can you generate, etc. It will become tougher and tougher to compete with Google if they start to erode the Redmond giant’s revenue stream and at the same time make customers happier because they no longer have to pay for an office suite.

For Google investors, the question is still about monetization and no one is sure how Google will monetize software but it is clear that they will hope to have more searches on their site as their software business will make Google searches even easier to perform. And of course for Google, revenue increases in direct correlation to the number of searches they perform.

So if these assumptions about Google getting more deeply involved in the software business and hoping to tie all the software into more searches then all software revenue models will be forced to change over time as no one will be able to sell any software anymore. It will be all about getting people to use your free software and then get paid via a service. Think SkypeOut.

As the world evolves into this new business model, one wonders how the old software giants such as Microsoft and Oracle will compete. Of course some of these ideas are speculation today but it seems that Google will do its best to push the software market in this direction as it looks for ever-more ways to generate that elusive next billion in revenue.

Disclosure: I occasionally purchase or sell short the companies that I write about. I may not always mention such purchase in my articles or blog posts. Today I happened to purchase shares of Google.

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