Google offers cheap option to Microsoft Office line

February 23, 2007|By MarketWatch

SAN FRANCISCO -- Google Inc. unveiled yesterday its boldest move yet to challenge Microsoft Corp.'s flagship Office brand of business computer programs.

Google is positioning its Apps Premier Edition as a low-cost alternative to Microsoft's Office, which has about 450 million users. Google's software bundle is to be sold for a $50 annual fee per user.

"With Google Apps, our customers can tap into technology and innovation at a fraction of the cost of traditional installed solutions," said Dave Girouard, vice president and general manager of Google's enterprise division.

Google's Premier Edition is a combination of its Gmail e-mail, Google Calendar day planner, Google Spreadsheets and Docs creator, Google Talk instant messaging and Internet telephony service, which are all freely available. There's also a customizable Web page that uses an Internet address of someone's own choosing, and 10 gigabits of data storage, which Google claims is about 100 times the storage capacity of an average corporate e-mail in-box.

Google's offering had been rumored since at least August, and analyst reaction has been mixed.

Shares of Google closed down fractionally at $475.85. Microsoft rose 0.1 percent to $29.39.

Kash Rangan, an analyst at Merrill Lynch & Co. Inc., gave Google a chance of denting Microsoft's $11.7 billion-a-year business selling office software.

"Google is starting to encroach on Microsoft turf, particularly in the small- and mid-sized business segment," he said in a note to clients at the time. "However, it will likely take Google a number of years to match Microsoft's deep functionality and integration."

Google's new suite of office products is shaping up to be Microsoft's worst nightmare, according to analysts at the Yankee Group.

"Bill Gates' greatest fear has always been the next Bill Gates. Google's Larry Page and Sergey Brin may very well have turned that fear into reality," wrote Zeus Karravala, the Yankee Group's senior vice president, in a research report released yesterday.

Kirk Gregersen, director of Microsoft's Office team, acknowledged the growing competition between the companies.

"We've had a lot of competition in this industry for a long time," Gregersen said. "We view it as good for customers and good for us because it keeps us on our toes."

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