Productivity applications tower over search's role in generating new revenues

Summary:It would make Google's current revenue model highly extensible beyond search, and remake the multi-billion-dollar business-to-business advertising and direct marketing industries.

So the WSJ says the AOL-MSN talks continue over which search engine will ultimately support the massive AOL/Time Warner user base. Web portal executives pooh-pooh Google's chances of rapid advancement outside of search. Crystal ball gazers the world over are still trying to figure out what the Sun-Google snuggle earlier this week amounts to, or not. And long after the eBay-Skype deal, countless heads continue to be scratched.

What's more, the Web 2.0 conference added 40,000 watts to the building amplification that, yes, something really is up these days. The press frenzy prior to the snuggle was further evidence that Next Big Things are in motion, but damned if anyone really knows just what and just how. The press can smell a good story long before the facts gel, unless apparently it has to do with WMD.

Yes, the gathering momentum around the next big thing is palpable. But comments from Yahoo!'s CEO Terry Semel and InterActiveCorp's CEO Barry Diller were the tip off to me this week that the hype around Google should in no way be under-valued. There was something in the posture of the comments that smelled of ... fear. And that's because of the truly momentous opportunity that now exists to wrench away from Microsoft the pernicious iron grip and selfish stagnation that Redmond has visited upon personal productivity applications for lo these last 12 years.

The gathering promise, and, yes, fear, is that Google -- using the best utility computing grid and fiber network money can buy, AJAX, Java, open XML formats, $91 billion in market cap, the attention of the world, open source applications code, and the best little Googleplex of highly motivated engineers -- might actually have a chance at changing the game on personal and baseline business productivity applications.

Because if even just a handful of baseline productivity application functions -- word processing, email, calendar, VOIP telephony, spread sheet, presentation graphics -- can be sourced as services from the Web instead of objects from the local or NOS hard drives, then the proverbial finger has been removed from the dike. Once these services are freed to the Web then the trick of context that Google mastered with search can be applied to business and personal commerce processes and communications. And we get a new revenue model for supporting IT and communications.

So it's not about the location of the server, or the bandwidth, or PC's waist line, or the operating system, or the object model. It's about the revenue model. When productivity applications as functional service components become free and reliable ... When users and IT executives recognize that they can trust these services to run baseline applications logic while protecting their data and privacy ... When users and their bosses trust the services provider enough to trade a very slim amount of information back from the user to the services provider on the nature (not details or data) of the action at hand -- then:
  • Just as with search today, when the services provider such as Google knows a little bit about what the user is up to as documents are created and communicated it can match that action contextually to myriad valuable information and services on the fly. And the provider can charge handsomely for the privilege of matching up workers as buyers and related business services as sellers, and do it highly efficiently, on a global scale.
  • Microsoft's revenues go down, the total cost of IT to the users goes down, and the way that businesses reach out to each other with business services and value goes way up. That's because if these types of transitions happen, and the new revenue model gains traction to move toward mainstream, there is less reason to keep paying Microsoft for Office renewal licenses. The new revenue model subverts the old.

Just as Google can well afford to provide trusted, reliable search for free in exchange for charging businesses for placement of contextually relevant and mostly welcomed ads and links, imagine the search model in the context of business activities. I create a document as an invoice, and I see unobtrusive links to bill collectors, certified email delivery services, updates to my accounting software, and an online MBA course. I create a spreadsheet to analyze my quarterly earnings, and I see unobtrusive links to investment bankers, business loan providers, tax consultants, and an ad for a happy hour two blocks away at 5:30 p.m. sharp.

The model, by the way, also works quite well on the consumer side. In fact the same infrastructure and logic supports both. When I add in my calendar that long-awaited two-week vacation, I get a link to a bathing suit sale, a local dog boarding kennel, and flight insurance.

Now, today when I do a Google search, maybe 10% or 15% of the time am I actually shopping; that is, looking for related information that I will act on with my wallet. But when I use my business productivity applications I'm almost always doing business, and I may even more frequently welcome more information on helping me to do work and run my business or P&L faster, better, and cheaper. If you give me free applications and match associated relevant services to my activities that I find even modestly valuable and unobtrusive, I will partake. Small and medium businesses should even find this compelling, as they waste less time seeking out the services they need. The services, in effect, find them.

And should -- and I grant you there are lot of ifs in here -- this model even unseat 10% of Microsoft's Office licenses of 400 million users -- then we have a whole new ball game. It would make Google's current revenue model highly extensible beyond search, and remake the multi-billion-dollar business-to-business advertising and direct marketing industries. eBay might be in a position to pickup some of this revenue too, but Yahoo! or AOL? I'm not so sure. Microsoft could certainly get in the game, but at what cost to its current business?

Topics: Browser

About

Dana Gardner is president and principal analyst at Interarbor Solutions, an enterprise IT analysis, market research, and consulting firm. Gardner, a leading identifier of software and cloud productivity trends and new IT business growth opportunities, honed his skills and refined his insights as an industry analyst, pundit, and news edito... Full Bio

zdnet_core.socialButton.googleLabel Contact Disclosure

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Related Stories

The best of ZDNet, delivered

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
Subscription failed.