Introduction: The US tech blog Silicon Alley Insider published an article today saying that although Google Apps is still very small compared to Microsoft Office, the long-term situation for Office is not secure.
So far, Microsoft has successfully resisted the attack of Google Apps. The demand for Office 2010 is very strong. When choosing between Apps and Office, many companies said they did not really consider Google's product. But they indeed use Apps as a bargaining chip in negotiations with Microsoft, hoping to get more discounts this way. Besides, the number of Google Apps users has reached 50 million, which does pose a certain threat to Microsoft.
However, there are only 1 million paying users of Apps, and many paying users actually pay less than Google's listed price (US$50 per year). Therefore, the annual revenue of this business is only US$50 million, which is negligible compared to Google's annual revenue of US$25 billion.
But this will not bring any comfort to Microsoft. In fact, from a long-term perspective, the cheaper and more user-friendly Google Apps is, the greater the threat it poses to Microsoft. And the widespread adoption of Apps indicates that this product is indeed very convenient and easy to use.
Harvard professor Clayton Christensen believes that disruptive technologies can gain a foothold by capturing the low-end market. For users in this market, these products are not only similar in performance to market leaders but also cheaper and more convenient. And in the eyes of many users, Google Apps is precisely such a technology.
In other words, Google Apps is still a classic disruptive technology. Its opponent is Microsoft's powerful "cash cow" business, Office, which contributes more than half of Microsoft's profits.
Like other disruptive technologies, given time, Google Apps will gradually improve. It will develop from the low-end market to the mid-range market, while Microsoft will protect its most profitable business by adding features. Eventually, the number of functions will exceed the needs of mid-range users. As long as Google Apps can meet the needs of the mid-range market, its market share will grow significantly.
Therefore, despite the fact that Google Apps is not large and many large enterprises have not seriously considered this product, Microsoft's Office business is not as safe as it appears on the surface and carries significant risks.