Monday Note

Web Apps are the future: modern, light, run and updated in the Cloud, they will progressively replace the antiquated, bloated, expensive to buy and manage desktop “client” applications.
So says Google. And walking the talk, they put their Google Apps against the reigning champion of desktop applications: Microsoft Office.
Microsoft never gives up and, as expected, announced a Web-based, a Cloud version of their upcoming Office 2010 along with the classical desktop suite, more feature-rich than ever.

Google Apps are free? Office 2010 on the Web is free. With the advantage of a familiar UI, User Interface, their brand, the desktop version as a fall-back, it would seem Microsoft is staying on top. Google Apps might be free (in most cases) and somewhat fashionable, if only for being “not-Microsoft”, but with the combined desktop and Web versions, Microsoft covers all needs.

Case closed? Not quite.

Office 2010 on the Web and Google Apps are not equivalent. If you lose your Net connection, Web Office, like its ancestor Outlook Web Access, loses all function. Everything runs on the server; you lose the server, you lose everything. Google Apps, on the other hand,  keep working, they are dual-mode Web apps. Take Gmail: you can open your mail, reply, write new mail. The same goes for Google Docs: you can edit documents, create new ones, share them. It sounds paradoxical for a Web app to have local desktop capabilities, but the more advanced ones do. When the Net connection comes back, the mail is sent, the docs are synchronized. This is the future of Web apps, made possible today by browser plug-ins, pieces of code that attache themselves to your browser and enrich its function set. Tomorrow, this will be standardized in newer iterations of HTML, HTML 5 coming soon to a browser near us.

Could Microsoft have done the same? That is engineer or, at least, announce, we know how the game is played, a dual-mode, on-line/off-line version of Office 2010 instead of limiting itself to the on-line flavor. There are two sides to the answer.
First, the business model, the revenue. Microsoft needs to fight Cloud-based Office competitors, but they can’t do this in ways that result in drying up the humongous desktop revenue stream. A more fully functional Web version of Office 2010 would prevent customers from buying the juicy desktop version. For reference, a full Professional version of Office 2007 retails for $349 on Amazon.
Second, the technical problems. Google, having no past, can start with a smaller function set than Office’s. For Microsoft, the Web-only feature list unavoidably very long. As a result, replicating the whole set inside the local browser is a bigger challenge for Microsoft than it is for Google. (In case I lost you on the way: the local versions of Web apps don’t rely on a classical desktop program, they run inside the browser.)
This gets us to what keeps Microsoft awake.

The Trojan Horse. Microsoft knows how reigning champions are dethroned. It starts with a challenger missing the whole set of features, reputation, support, comfort in a word, offered by the incumbent. But the interloper is cheaper, simpler. ‘It’s lightweight’ says the king. But that very shortcoming attracts customers, they like the price, the simplicity. The challenger gains a little more muscle. Seeing this, the incumbent bulks up, adds features, goes up-market. After a few iterations, the challenger becomes accepted into the mainstream while the bloated incumbent finds itself “niched”, sidelined in specialized applications, if any are left.
The example Microsoft knows very well is how the PC killed minicomputers and took over the server market. Initially called a microcomputer, the new genre had no business getting in business applications. After a while, IBM took notice and embraced the PC, only to see it steal the office market. And so on. Now, Google’s 1,5 million servers are muscled-up PCs. DEC, the king of minicomputers is dead. And Sun, the erstwhile ruler of the Internet servers market just abdicated and sold itself to Oracle.
Going back to the fight for the Office market, Microsoft knows very well what Google is up to: displacing “legacy” (a polite word for old, bloated) desktop applications with initially “inferior” Web apps.

The plan is slipping a new generation of desktop apps through the browser. How do we think dual-mode, on-line/off-line so-called Web apps achieve their off-line functions? Browser plug-ins such as Google Gears. But, here, “plug-in” is merely a way to avoid saying desktop software. Hidden inside the browser, for sure, but local desktop code nonetheless. In practical terms, when you get into Google Docs or Gmail, or similar applications, you give explicit or implicit permission to sneak software contraband onto your desktop, disguised as browser extensions.
The browser has become, if not an operating system proper, a container for desktop software. This is what Microsoft is afraid of, for good reason. They know what they did to IBM and to DEC, they’re not sure they can avoid a similar fate at the hands of a new generation of Web apps, from Google and others.

One more thing… Netbooks. The numbers are in: from Q1 2008 to Q1 2009, netbook sales have doubled. And, according to research firms such as Gartner, Display Search and iSuppli, while laptops sales are flat, while desktop shipments are down between 5 and 8% this year, netbooks sales will double again and reach approximately 33 million units worldwide this year. This is the beachhead Google chose for its attack against Microsoft, the sector where Microsoft had to cut prices and stick with the aging Xp version of Windows to avoid being displaced by Linux. Price cuts and old versions of Windows will not work against the Chrome OS and Google apps combo.
 —JLG

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