Office bloat may not affect the skin on George's nose. But, about that skin in his wallet....

My colleague George Ou (the official internal David Berlind-whip at CNET Networks) has taken issue with my opinion that Google Office [sic] will compete with Microsoft Office (even though Google's CEO says it won't) because of the green field opportunity Google has to strike at the 10 percent of the office features that 90 percent of the market needs.

My colleague George Ou (the official internal David Berlind-whip at CNET Networks) has taken issue with my opinion that Google Office [sic] will compete with Microsoft Office (even though Google's CEO says it won't) because of the green field opportunity Google has to strike at the 10 percent of the office features that 90 percent of the market needs. In other words, the remaining 90 percent of the features that strike at 10 percent of the market -- what PC users often refer to as bloat -- could be a weak spot for developers of productivity software (not just Microsoft Office). George isn't buying it.

In his recent blog entry, fellow blogger David Berlind is all over Microsoft's "Office bloat" and is convinced Google is in a better position to understand users' needs for an Office application. Despite the fact that Microsoft collected 1.2 billion data sessions to design its new Office 2007 user interface, David still feels that Google knows users better. But I have to wonder what all this commotion about "Office bloat" is.....The way I see it, if a product does everything I need it to and it happens to have features that I don't use, it's no skin off my nose unless those unused features affect me negatively.

The rest of George's post, aptly titled Office feature bloat is no skin off my nose, backs up this position.

Unfortunately, George misinterpreted what I wrote and then took it out of a very important context. I never said "Google is in a better position to understand users' needs for an Office application." I did say that because Google Apps is Web-based, Google's traffic reporting system should be able to give Google better insight into which of the Google Apps features are getting used. I also didn't say that "Google knows users better."

What I said (and said again in response to the Talkbacks) is that if Google stays focused on the 10 percent of the features that serve the majority of the market's needs, and it can continue to do so more cost effectively than locally hosted office offerings, then there's no way that Google Apps cannot be considered a competitor to Microsoft Office. The last time I checked, the bottom line on the balance sheet was still an important one to businesses and other organizations. No CFO or accountant looked at the red ink and said, that's fine with me so long as we have a feature set that takes a roll of paper towel to list-off. 

Like other hosted application providers, Google gets to bypass certain line items in delivering an application like Google Apps off a multi-tenant Web-based architecture. For example, there's no retail channel to support. No cost of manufacturing and boxing media. And upgrading (from the solution provider's point of view) doesn't ripple in "here we go again" fashion through the solution providers' business processes and budgets the way it does with shrink-wrapped software. Not to mention the support costs associated with upgrading. So much less can go wrong during the upgrade process (it only takes a click of a browser's refresh button to upgrade a hosted app) that providers of hosted solutions get to save money on their support operations as well.

The result? Hosted application providers have the luxury of passing some savings on and economically serving a market that's used to paying much more for software and the infrastructure to support it. Not just in acquisition costs. But in other licensing costs, ancillary software costs, support costs, and upgrade costs (just to name a few). For example, collaborating over a word processing document or spreadsheet with shrink-wrapped software -- even Microsoft Office -- isn't as simple as buying and installing two copies of Microsoft Office. There are additional costs associated with wiring up the collaboration. With Google Apps, not only isn't any local software needed, nothing else but network connectivity is needed either. Granted, the offline problem isn't yet solved. But currently, we're not debating the shadow that the offline problem casts over hosted applications -- a problem that Google will no doubt solve (as Zimbra recently did). 

Today, not only does Google Apps serve the heart of the market with basic productivity functionality and collaborative abilities that in my estimation are far more elegant and lightweight than anything else I've seen. It does it for free. Oh, you want support (support that you also must pay other solutions providers for) or 10GB of storage (as opposed to the free 2GB you get for free)? Then it's a measley $50 per year per user. To put that in perspective, the new per incident support cost for Office 2007 is $49.

Because Google Apps is browser-based, the risk profile is entirely different than that of locally installed software. For example, with no Google Apps components being loaded locally onto your system (at least for now), there's no software that could eventually serve as a conduit for hackers or that has to be updated to shut those conduits down once discovered (only after the corporate regression testing of those patches has been performed). That doesn't mean Google Apps doesn't come with its own risk profile. For example, documents stored on Google's servers are not encrypted and should one of your users' Google Apps credentials fall into the wrong hands, sensitive information could end up getting compromised. Even so, that sort of document security may only concern some segment of the market.

I'm not sure what the odds of having a notebook computer lost are stolen are vs. those of having your Google Docs credentials compromised. But I do know that most of the documents sitting on hard drives out there are completely unprotected should those hard drives fall into the wrong hands. For what it's worth, I personally believe that the risk profile of Google Apps compares favorably to shrink wrapped software from a cost and resource perspective for most of the market.

Perhaps what I'm getting at is that complexity has a cost. In some cases it's hard dollars. In others not. Google Apps is suprisingly short on complexity given what it does. If there is complexity, that complexity appears to be entirely Google's problem. Not the end user's. I'm not sure we can say the same of shrink-wrapped software. 

There's a pretty vibrant conversation at the bottom of George's blog where some of ZDNet's readers take issue with George's grocery store analogy (others support it) and how, just like with Office, not every shopper in the store needs every item the store needs to sell. But here again, the discussion is hard to have without involving cost. In the event that someone wants everything in the store, additional cost will be involved. So, it's not like they have the entire store at their disposal for one high price the way they get all of Microsoft Office's features for one relatively high price (even compared to other locally hosted productivity suites). Google actually falls more in line with the grocery store analogy than not.  For example, if the core functionality in Google Apps falls short in certain areas, $50 Premier account holders are welcome to shop with Google's growing list of Google App partners who may have that functionality covered. It's precisely the same model that offers with App Exchange -- one where the final cost is commensurate with what you really need.  Not what the entire market needs.

The "Office 2.0" space will unquestionably be one of the most contested markets over the next 12-24 months.  Public discourse about the pros and cons of the two approaches will no doubt result in religious discussions and passionately articulated opinions. But, in evaluating solutions and new approaches to old problems, you can't break apart major issues like cost, functionality, reliability (the offline problem), etc. They're integral to each other, the conversation, and the future of shrink-wrapped software which will no doubt go through some restructuring of its own once the benefits of low cost multi-tentant network-delivered productivity is discovered by more people.

Gimmee some skin George.