The blogosphere has been abuzz with gushing commentary about Google Apps. Some of it is about how Google is now taking on Microsoft head to head. This couldn't be more wrong.
Google Apps is a completely different beast than Office even though they both seem to do the same thing: manage email and calendars, edit documents, and build spreadsheets. In this case, the means to this end makes a significant difference.
Google Apps is a Web application and, as such, is subject to law of mash-ups: anything that can be mashed-up will. An online application like Google Apps has the potential to become an ecosystem for other businesses that add value to overall mix in ways that even a company with resources like Google can't match.
There are a few examples already. Sxip Identity announced that they're providing integration with Google Apps to provide single sign-on capabilities across an enterprise and better user management. This provides some foundational elements for further integrating Google Apps into the enterprise.
That may sound pretty much the same as what you might do by integrating two pieces of software in a traditional model, so I offer up a second example. DirectPointe (disclaimer, I'm on the board of directors) offers an enterprise file, print, desktop management solution for small businesses that includes Google Apps as a "checkbox" in the order form.
The last example is especially interesting because it mitigates some of the weaknesses that others have pointed out in Google Apps. For example, you need a domain name to use to Pro version of Google Apps. Getting one and tying it into Google Apps is beyond many small businesses. The DirectPointe integration makes that whole process manageable.
In addition, DirectPointe provides eService as part of it's product and can answer your employees questions, even if Google won't. Having support is critical to small businesses who may not have IT staff on site. If Google Apps isn't meant to appeal to the Fortune 500, then it needs this kind of service support to appeal to small and medium sized businesses.
For their own business reasons, Google isn't providing a complete solution, but because of how Apps is delivered, others can layer features and services on top of Google's business. In essence, Apps is embedable in other products and services, something most software applications don't support well.
Of course, this isn't a unique feature of Apps, it's just a fact of life for well-designed applications on the Internet. Google's betting big, not just with Apps, but with other things like Maps as well, that letting other's mash-up their stuff to add value will make Google more valuable as well.
Google isn't competing with Office. They're competing with non-consumption. That is, they're enabling uses that don't exist today. In this world, Office and Apps can live side-by-side and both succeed--no one has to lose.