Financial-analyst-turned-Web-pundit Henry Blodget posted an explainer this weekend on what "disruption" really means and why Google and other Web-based office suites are on ther verge of disrupting Microsoft in a major way.
From Blodget's post, entitled "Microsoft in Denial: Google Threat is Classic Disruption":
"Disruptive technologies do not destroy existing market leaders overnight. They do not get adopted by the entire market at the same time. They do not initially seem to be 'better' products (in fact, in the early going, they are often distinctly "worse.") They are not initially a viable option for mainstream users. They do not win head-to-head feature tests. Initially, they do not even seem to be a threat."
Google Apps and other Web-based office suites sure fill that bill.
In spite of all the hype this year, there's still no real momentum among either consumers or businesses for Web-based office suites, according to independent, non-Microsoft-funded researchers.
Market watcher NPD has released results of a new study that found a very small number of its 600-plus-member U.S. customer panel are using Web-based consumer office-productivity suites as desktop office-suite replacements. NPD found:
- 94% of PC users have never tried a SaaS (Software as a Service) office productivity suite app
- 3.9% use SaaS apps as desktop compliments
- Only 0.5% use SaaS apps as desktop replacements
Compete.com's most recent estimate of 1.5 million Google Apps users is on the high side and may be more of a measure of visits to Google's site rather than use, according to NPD analyst Chris Swenson.
"Look at the average time spent using Google spreadsheets - two minutes or so," Swenson said. "A lot of people are being driven to Google Apps from Google advertising campaign. I see their ads all over the Web now, and I think that much of this traffic is being counted, and is weighing down the average time spent on Google Apps."
Burton Group analyst Guy Creese has voiced similar qualms about Google Apps adoption, but from the enterprise point of view.
Creese blogged this weekend that Google CEO Eric Schmidt's much-balleyhooed claim that the cloud will handle 90 percent of today's computing tasks within five years is overly rosy, too. Creese said 30 -- not five -- years is a more realistic target.
Blodget and Creese correctly charge Microsoft with a lot of non-customer-centric behaviors in the desktop-productivity space. Price tags of $500 per copy for the versions of Office available to business users are way out of whack, Creese said. And Blodget repeated the oft-heard charge that Office is too bloated with features that a very small percentage of users want or know how to use.
But here's where I part ways with Blodget, who claims Microsoft is "in denial" about the potential threat from Google and the rest of the Web-based Office gang.
To me, the way that Microsoft is addressing the so-far small number of users who want Web-based productivity software is disruptive. Microsoft isn't listening to the venture capitalists and A-list bloggers who are ridiculing the Redmondians for not discontinuing immediately any more client-based Office development and turning Office into a Web-based product.
Instead, Microsoft is doing what the majority of productivity-suite users currently want, by adding a Web-collaboration element to Office with Office Live Workspace. At the same time, Microsoft also is sowing the seeds for a Web-based consumer office suite with the Notes and Lists components of Office Live Workspace. If and when there's enough customer demand for such a product, Microsoft won't be starting from scratch to build a Web-based suite.
Not rushing headlong into a bubble-licious market doesn't equal denial. Sometimes resisting peer/pundit pressure can be pretty disruptive, too....