Month of February, 2008

With the announcement of Version 1.0 of their AIR platform Adobe is taking a bold step towards bringing structure to a development space that’s been chaotic for some time now. While Java, Javascript, Flash and Ajax have been around for a while, none of the major players have taken it upon themselves to serve the needs of the immense but disconnected universe of developers currently sweating over “Internet-with-a-thick-client” applications that are flourishing out there in the Windows and, oh, MAC world. Just because the European Parliament has finished suing Microsoft and Al Gore has finished making the Internet ubiquitous does not mean we have all bases covered when it comes to developing Rich Internet Applications (RIAs), the moniker now applied to these gadgets, widgets, services, applications and appliances that have a little bit of desktop, a little bit of internet, and a lot of rich, yummy-looking interface.

Enter Adobe, Stage Left, with Adobe AIR, a trick new platform that works across operating systems, delivers stunning graphics and interactivity, and doesn’t require a small Indian city to code and sustain even the simplest app. One could argue that Adobe is doing as much as Mr. Gore to save the planet, given the number of hours of sheer toil the AIR platform removes from the software development cycle.

That said, we here at Content Circles were a little underwhelmed with the whole AIR announcement. We were looking forward to code-offs, mega-tours and sizzling fireworks; instead we saw a simple press release and a toned-down media event. Sure, Salesforce, FedEx, eBay, Nickelodeon, Nasdaq, AOL and The New York Times Company were there, showcasing their applications running on AIR. But we still think it deserves more - this may be the biggest announcement out of Adobe, or any of the major players this year folks! Thankfully Adobe evangelists are busy working on OnAIR Tour Europe 2008, a major multi-city tour beginning in Madrid on March 31^st and wrapping up in Milan on June 13^th. This is good stuff. We’ll take one of those for the US of A please.

But enough whining. We love AIR. We’ll be hitting the streets with our beta product in a few weeks, and it’s all AIR baby. Meaning, we now write our code once, wrap it in an installer for Mac and another installer for Windows and called it a day. That’s a gross over-simplification, but AIR does enable us to concurrently develop for both OS’s, which is a core benefit of our product – allowing distributed teams on disparate platforms to easily collaborate and share documents. With AIR we can make some tweaks to the UI or back end, quickly compile it, and immediately test the results on both platforms without wondering if everything got checked into BOTH forks of the code tree. Result? Realtime development and testing with far fewer headaches and people. Which is, like, all Groovy with us. No pun intended (or is it?). There’s more to AIR than just faster development however. Did I mention the delicious graphics? But wait, there’s even more! Rather than me paraphrasing, why don’t you go visit Marshall Kirkpatrick on ReadWriteWeb who has put together a nice “Top Five” reasons for becoming an AIR head. Can’t disagree with any of them.

I was making dinner tonight, getting down with a vegetable peeler and some thumping Techno (not necessarily a good combination) when - silence. Deep Mix Moscow Radio apparently forgot about Glasnost and my dance needs and went back behind the curtain, taking their internet stream with them. Reminding me yet again why it's a really dumb idea to depend on the Internet to deliver anything, consistently. I scouted the list of Techno internet radio stations and most were "not available now." I'm happy to report that I finally found a consistent stream (FG Underground, if you're interested) and dinner got taken care of, but like I said, foolish me, getting caught out on a cold night with no tunes.

Loss of streaming Techno while making dinner might not seem like a big deal, and it's not. But loss of access to my business content at a critical point of my day is simply a non-starter.

Maybe I still have some residual resentment at having had to do an in-depth analysis of Google Apps over the last few days, when a sane, objective glance at the concept is enough to convince me - DUMB IDEA! I love Google, I love to type in search words and have all sorts of surprising results come back. But there's no way I'm going to trust them to format, store, manage and deliver my business content. It's like trusting the US Postal Service to bring me my coffee in the morning - thanks, but that's way too important a task to mess around with. It's like trusting SuperCuts to give me a killer haircut right before that big date. It's like handing my bags to the official-looking woman at the airport in Bangkok and trusting she'll have them delivered to my hotel for me. Dumb Dumb Dumb.

And it's unnecessary. There are solutions already out there that millions of people use every day. Those solutions are not perfect by any means, but we believe our software will make a big improvement in the process. We do NOT think the right answer is "Start from scratch and change everything." I have a word for that approach and it begins with "D," which may not surprise you. People don't like change. "If it ain't broke, don't fix it." "If it's slightly broke and you expect me to change my ways to help fix it, then don't fix it." In almost every process that relies on people, change comes slowly, if at all.

We know that things can change, and change quickly. Work practices and attitudes can be radically altered by disruptive technologies such as the internet. But Google Apps isn't one of those disruptive technologies (unless I'm speaking personally, in which case it's definitely disrupted my week). Maybe in a few years, if Google brings the quality of the tools up to the then-current standard of Microsoft Office. Maybe if they somehow can guarantee uptime and accessibility under all circumstances. And most importantly, if they can deliver something extra on top that makes the whole deal so much better, faster, easier and cheaper than the alternatives. THEN, maybe, they'll get professionals to abandon their old tools and processes.

But we're not hanging our hat on that happening in the immediate future. Meanwhile we see a critical need TODAY to improve the way people collaborate on and share information that already exists on their hard disks or enterprise servers. Content they're creating using desktop applications, not Google Apps. Our goal is to solve this Here & Now problem with some smart applications that work with your Here & Now computing environment. Oh, and our apps are really handy for accessing your music files too...

What do VHS and Blu-ray have to do with Google? You’re probably familiar with these guys being the winning standards in video delivery formats, trumping Betamax and HD-DVD respectively.

For it’s part, Google wants to trump Microsoft to become the next storage and delivery format for your office content. Last weeks’ announcement of their enhanced set of services for the enterprise further underscore this desire, but are they set to become the next Blu-Ray, slamming the competition out of the ring before they’ve even got their tooth-guard set?

Ummm, no; not even close. In fact a quick tour of some respected websites paints a picture of a marketplace so heavily stacked against Google that one wonders why they’re even making these “C’mon, take a swing at me” announcements. Napoleon Syndrome, perhaps?

First, the announcement: On February 7th, Google announced the availability of Google Apps Team Edition. In Google’s own words, Team Edition allows groups or teams to “instantly share documents and calendars securely without burdening IT for support.” I’m sure IT is thrilled with the news that they can go home early and leave their infrastructure in the hands of Google. OK, non-quality statement from me there; let’s quote Rebecca Wettemann, an analyst with software tracking firm Nucleus Research instead: "If it is going to appeal within business enterprises, Google has to play nice with IT. Google still has to convince companies that they are to be trusted." (Source: Reuters.com).

OK, so maybe there are some concerns about turning one’s network over to Google, but the burning question is, assuming IT gives them the nod, are they about to unseat Microsoft as the recognized standard for collaborating on and sharing text-based information? Unless you’ve been living under a rock for the last decade you’re probably aware that Microsoft Office is without question the leading toolset for creating and editing documents. People buy it, people borrow it, people steal it, people get it pre-installed on their PCs. According to Business Week, July 2006 (Before Google Apps was even hatched) Microsoft Office has a tidy 95% market share and 400 million copies in circulation. Over the intervening 18 months Google Apps grew it’s installed base to a stunning – half million businesses using the product (source: Google). Let’s say that’s five million individual installs. What the heck, let’s say it’s ten million. Whatever the number, it’s still a long way behind Microsoft.

Even more important than installs is actual usage. I don’t have figures for Microsoft Office usage, but let’s use a simple number like “Lots.” How does Google compare to that? In December 2007 (eWeek) Microsoft Watch published the findings of a survey by NPD. Almost 600 PC users were asked “Have you heard about online, browser-based office productivity applications like Google Docs, Google Spreadsheets, gOffice, etc.?" NPD also asked, "If so, how often do you use them?" The results? Ninety-four percent of U.S. consumers have never tried a Web-based productivity suite alternative. A mere 0.5 percent have substituted Web-based productivity suites for desktop software such as Microsoft Office. Chris Swenson, NPD's director of Software Industry Analysis, described the 0.5 percent figure as being a "bit high." Swenson estimates that, of the projected 840 million PCs in use by the end of 2007, a mere 0.18% of them will use services like Google Apps. By my math, that works out to about 1.5 million users. Ouch.

Yet more interesting data from the survey: Of those that heard of and tried the service (4.1% of the survey population), only 0.5% use the service regularly. That’s an attrition rate of almost 90%. By any business model, that’s not good.

Thus far I haven’t gotten into WHY people don’t use these tools, or don’t stick with them. I think you’ll get the best answer if you try using Google Docs for yourself. Me, I’m biased. I think Google Docs sucks, especially if I’m working with a complex document that contains, oh, headers and footers. Headers and footers! I mean, c’mon, Google, that’s the first thing you PUT in a business document. For the record I’m no fan of Microsoft products either. I just reverted to Office 2003 because I couldn’t stand Office 2007’s “guess where I hid that tool you need today” menu system. But that’s fodder for another blog post. The point is, despite the very low standard set by Microsoft, Google still managed to blow it, delivering a service that I would never consider using for my critical business documents.

Let me reinforce that – I would NEVER use Google Docs for a business document. I’d go to the ends of the earth to find a computer with Office 2003 installed; I’d download and install OpenOffice; heck, I’d even reinstall Office 2007 before I’d use Google Docs. That may change later in 2008, or 2009, or 2020. But this is now, and my docs won’t wait. Hey, if you don’t like my independent opinion on the subject, go ask another, larger, less biased source – Microsoft. They recently “issued” their Top Ten list of why Google Apps sucks.

Speaking of Microsoft…this really is face-off between two very large, very profitable companies with different values and intent. Google is, at heart, a media company. They sell advertising, lots of it. Billions of dollars worth every year. Their total revenue for 2007 was a stunning $16.6 Billion.
How much of that revenue do you suppose comes from selling Google Apps? I don’t know, but if we look at their Q4 ’07 earnings statement we see that all non-site or non-partner earnings (i.e. everything BUT advertising) accounted for $70 million, or approx 1.5% of their revenue for the quarter. Note these figures include the Search Appliance, which has been Google’s enterprise mainstay for years. So I’m going to say with a high degree of confidence that Google’s enterprise business was less than $300 Million in 2007. Compare that to Microsoft, whose Q2 2008 earnings of $16.48 Billion consisted almost entirely of business software sales. Significantly, revenue from their Client, Business, and Server & Tools businesses each grew outrageously (68%, 15.5% and 37% respectively). AND their Online Services segment grew almost 40%, bringing in $863 Million for the quarter.

The numbers stack up strongly against Google. Microsoft’s Office business is huge, and growing. Google’s, by comparison, is tiny, and for a startup, somewhat anemic. 133% growth looks good on paper, but it’s on such a small base as to be insignificant. Google’s best-case installed base for 2007 was 1.5 million seats for Google Apps, compared to. 500+ million for Microsoft Office. And let’s not forget that near-90% attrition rate in the Google Apps user population.

This is not just an “out-there” problem for Google Apps. Internally Google is still structured very much like a start-up, where bratty, successful attention-grabbing products and services are highly valued. Google Apps, with it’s 1.5 million users after 18 months, is surely less interesting than YouTube or Orkut. Using the Google Search Appliance as an example, Google has not historically thrown it’s mighty resources behind enterprise tools. Perhaps that’s changed, but I doubt it. And if it WAS changing, Microsoft’s recent overtures to Yahoo will ensure Google is firmly refocused on maintaining and growing it’s search-based advertising business in the months and years ahead. A press release and a few minor service enhancements does not a strategy shift make.

Things could not be more different over on the other side of the ring. Microsoft is structured to sell recurring software licenses to enterprises, and almost every aspect of it’s business lines up behind that model. Strong distribution, aggressive protectionism, clever vertical and horizontal integration of products, an enormous installed base and billions in the bank will ensure Microsoft’s healthy growth well into the next decade.

There’s simply no likelihood of Google unseating Microsoft any time soon. I’m not saying it’s a Fait Accompli that Google will fail in it’s efforts to COMPETE with Microsoft. Far from it. But these two will have to go many rounds before Google is even a contender, let alone scoring a knockout of the reigning champ in this space.