Office 365 Launches Microsoft Against Google

There has been nothing natural about the launch of Microsoft's cloud office suite.

Given its importance, it is strange how little Microsoft has been communicating about Office 365 in a little known blog, in press releases and public events - until today. Is Microsoft afraid of Google's next move?

You may have heard of Office 365 just occasionally, but it is really a big deal for Microsoft. If we assume that cloud services will be playing a major role in our lives - and if we assume that cloud services will replace locally installed software at some point - then Office 365 is Microsoft's first notable, large-scale cloud service for a wide range of customers. It also launches as a possible alternative of Microsoft's Office products, which generate more than $4.5 billion of revenue per quarter as part of Microsoft's Business division and remain a core money source for the company.

Office 365 just launched, but there is a good chance that you have no idea what it is and there is an even better chance that you have no idea how it looks and how it feels. The good news is that you haven't missed much if you have not been part of the beta launch. In all fairness, the product is targeted at a limited audience: mainly businesses and not consumers.

Still, the launch is somewhat reminiscent of the launch of Microsoft Word in 1983. Back then, Word launched from Microsoft against the then-dominant office application Word Perfect (launched in 1979) that was offered by Satellite Systems International (SSI). We all know how this fight ended - SSI is dead and Word Perfect is now ailing and is being kept on limited life support by Corel. However, there are some similarities between 2011 and 1983 as well as key differences that should benefit the consumer and deliver an innovative push in this market segment.

In the 1980s, Word was created as Microsoft's first major app to support DOS and later on Windows. In the 1990s, it was a much more symbiotic relationship between Windows and Office, where both applications supported each other and amplified their sales. For a long time, Windows and Office have been a pair that has been purchased in combination with a new computer and dominated productivity software sales. There are alternatives out there, such as OpenOffice or IBM's Lotus Symphony, but let's be realistic: Microsoft's Office is the de-facto standard for most users out there. Word Perfect began fading away by the early 1990s, and virtually disappeared when Microsoft released Windows 3.1 and later Office 4.0, which included a much improved Word (for Windows) 6.0, Excel 4.0 and PowerPoint 3.0 in 1994.

Word Perfect always remained a capable word processor, but was overwhelmed by the Windows train and Microsoft's increasingly aggressive marketing. Word Perfect for Windows launched in 1992, but it was already too late. It merged into Borland's office suite in 1993, was sold to Novell in 1994 and to Corel in 1996. Corel tried to relaunch WordPerfect several times with a business and government focus, but failed in the long run and today's sales are very limited.

In 2011, Microsoft once again enters a new market with an office product against a dominant player - Google. Of course, the difference is that the rules of the game have changed. Google does not just own Apps. It owns close to 70% search market share, according to Comscore, and its web properties attract the lion's share of Internet users. Its search engine front page remains, despite the rise of Facebook, the most powerful advertising page on the net - a page Microsoft cannot touch. Google also dominates smartphones and is advancing into tablets - not to mention countless other applications and services that are ahead or at least a match for Microsoft's comparable services, with the exception of an operating system that is just launching. The game in 2011 is not a single application that has to compete with a platform as it was the case in the 1990s. There are two powerful platforms that are facing each other.

Google has grown into an extremely powerful and resourceful company that can outspend Microsoft in many areas. Google is not the best marketing company - fortunately for Microsoft - but it has the clear lead in cloud productivity and, most importantly, it owns the mindshare in this market. Google has recently commented on the launch of Office 365, stating that Office 365 is not what it seems to be. In reality (and according to Google), Office 365 won't work for teams, its subscription plans are expensive and confusing and it's for the desktop, not the cloud. Oh, and, of course, its built for Microsoft and not for you.

Google Apps is Microsoft's main target with Office 365, but given the task ahead, its marketing has been, ummm, medicocre. What we have been told today is that the software can keep Office document formatting as it is, while Google Docs screws it up. That's about it. I imagine that the marketing will be stepped up, but I would have thought that Microsoft would have drummed up more support for an app that is launching into the praised cloud computing era and targets a massive segment of the company's revenue share. Perhaps Microsoft isn't so sure what Office 365 really can do. However, there is also the clear notion that Google isn't doing much either, with the exception of this one blog post and a consistent flow of news that government and education agencies are adopting Google Apps.

A while ago, I had a chance to test drive Office 365 as part of the beta, but I have to admit that I dropped it after a few days simply because it was too complicated. It comes with all the inconvenience downsides of an online app such as a required login (who really wants to remember yet another login?), as well as delays in response and load times. My main issue with Office 365 is that it just did not integrate very well with the standard and local version of Office, and ended up as a nice-to-haveproduct, but not as a must-have product. It surely has its advantages as far as collaboration is concerned, but its appeal is very limited at this time and there may be few users who are willing to give up their local office product for a cloud product, especially as long as a permanent 9and fast) online connection cannot be guaranteed in all places. The local version of Office is, for me, more convenient to use today. Strangely enough, it is Google's cloud connect that ties much better into office via a plug in and automated cloud storage of Microsoft's office products.

Google Apps and Docs are still rough around the edges, but they do what they are supposed to do - and deliver a good-enough productivity suite on the web, if you need it. However, they still lack offline capability. The unknown variable in this game could be the web browser: Google has optimized Chrome to work very well with its cloud services by integrating accelerations via SDPY and using the ability to store multiple logins inside the browser. Microsoft has missed the opportunity so far to use IE9 as the preferred tool for Office 365 and give its office suite the edge with a few special IE9 features - which may really be the company's biggest problem with Office 365: besides being in the cloud and offering some still complicated document sharing features, Office 365 is not offering any breathtaking advantages.

Office 365 is a start, but it won't take over the world. To challenge Google, Office 365 will have to become more compelling and Microsoft needs to show much more confidence in its product via its marketing. Kinda like it did with the original Word and Office.