Google Just Scored Another Victory in Its War With Microsoft
Google competes with Microsoft on a variety of fronts. In most of these areas, including mobile operating systems and web search, Google has the advantage.
But there's one arena where Google remains the underdog. When it comes to enterprise productivity suites, Microsoft Office remains far ahead of Google's competing Apps -- but that could change.
The head of Google Apps, Amit Singh, said he believes that Google can capture up to 90% of the market. On Monday, he moved closer to that goal, signing a deal with Whirlpool to use Google Apps.
Google takes one of IBM's clients
Admittedly, the Whirlpool deal isn't a case of stealing customers directly. Prior to its agreement with Google, Whirlpool was using International Business Machines' Lotus Notes. Still, Whirlpool -- as a major corporation -- is a huge client, and lends credibility to Singh's goal of conquering the Office market.
Of course, Google Apps is obviously a threat to IBM as well -- losing Whirlpool to Google means one less customer for IBM. As a percentage of IBM's overall business, Lotus is large but not enormous. It falls underneath IBM's software umbrella, a division that brought in about a quarter of IBM's revenue in fiscal-year 2012.
Within software, it's just another of IBM's offerings: in addition to Lotus, IBM has other franchises like Tivoli and WebSphere, among others. Still, Google's poaching of Whirlpool shouldn't be viewed as positive for IBM -- in its last annual report, IBM cited Lotus as growing product, with revenue increasing 8.6% from 2011.
Microsoft can't afford to lose its Office empire
But unlike IBM, Office is a massive part of Microsoft's business -- in fact, it's the most valuable. Last quarter, Microsoft's Business Division brought in about one-third of the company's revenue, and the vast majority of its profit. As a percentage of the Business Division, Microsoft Office brings in over 90% of the revenue.
In short, while some might think of Microsoft as a Windows company, it's actually an Office company. Even if Windows were to fall by the wayside, Office should continue to net Microsoft billions going forward.
That is, unless Google Apps captures that 90% market share Singh believes is possible. He told AllThingsD last year that, although Google Apps lacks some of the more powerful features of Microsoft Office, Google's ability to compete on price should make Apps an attractive alternative.
There's evidence to suggest that Microsoft is starting to fear Apps. In a commercial released earlier this year, Microsoft highlighted the incompatibility problems that are likely to plague many Google Apps users, in effect scaring them away from Google's alternative
But Microsoft Office continues to thrive
At least for now, Microsoft need not worry. Office is still surviving, and even thriving, in the face of increased competition from Google. Office 365, Microsoft's cloud-based alternative to traditional Microsoft Office software suite, has seen tremendous growth, and is now projected to bring in $1.5 billion in revenue every year. Unlike classic Office, which is paid for upfront, Microsoft charges a monthly fee for access to Office 365.
Nevertheless, Microsoft shareholders should keep an eye on Google Apps. Google's recent poaching of Whirlpool from IBM suggests that there's something to Google's Office alternative.
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The article Google Just Scored Another Victory in Its War With Microsoft originally appeared on Fool.com.Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google, International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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