Desktop duel: Google aims to snare business from microsoft with free online office software designed for small-to medium-sized businesses.

• Author: Peterson, Eric
• Position: [Q2 TECH REPORT] - Google Inc. - Technical report

A long-brewing rivalry with far-ranging battlefields, the computing clash of the 21st century is coming to a desktop near you.

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Redmond, Wash.-based Microsoft has long dominated the productivity software space with its ubiquitous Office suite, and its Word, Excel and PowerPoint applications have become household words. The company's revenues from its business division--90 percent of which are derived from sales of Office and its component apps--were more than $16 billion in 2007, topping both Microsoft's server and operating system divisions, with a profit margin approaching 70 percent.

Those financials are not lost on Mountain View, Calif.-based Google. The search titan is now in the same rarified league as Microsoft--at press time, the companies' respective market caps were $180 billion and $278 billion. Now Google is looking for ways to translate its dominance in Internet search (about 70 percent of the U.S. search market) to cash-cow markets Microsoft has long dominated.

Naturally, Microsoft's near-monopoly in the productivity software market--the market share for both Word and Excel are about 95 percent--is one such target.

Google's answer is Google Apps, its own office productivity suite with applications like Docs--Google's answer to Word, Excel and PowerPoint, rolled into one online package--Gmail, and Calendar. Documents can be exported into standard Office file formats, and likewise Office documents can be opened by Apps. And since the Apps launch in February 2007, Google has rapidly rolled out one improvement and new feature after another, the latest being an integration of Salesforce.com's customer relationship management software into Apps.

Unlike the $300-per-user price tag borne by a typical copy of Microsoft Office, Google Apps is available free for a standard account or $50 annually for a Premier Edition account with more memory, more features and technical support-plus advertisements keyed to the text in Gmail messages.

Also unlike Microsoft Office, Google Apps runs online: no installation, maintenance or update downloads necessary. That means data that's accessible anywhere--"in the cloud" in techie slang--and a corresponding sharp reduction in IT spending. It also means your data is saved on Google's servers.

"What we see as a big benefit of Apps is collaboration and efficiency," Google spokesman Scott Rubin says. "You never have to worry about access to the data. When I'm working on a document with my colleagues, I don't have to think about what version I'm looking at. It's up dated in real time. Within spreadsheets, we have an embedded chat window."

Rubin says 500,000 different domains have been registered with Google Apps...