The Real Threat to Microsoft Office: Maybe Not Web Apps

By Josh Catone
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A lot of fuss was made recently when Google added footnotes to its Docs web app. Not because the ability to add footnotes is such a killer feature — Microsoft Word has had it for as long as probably anyone can remember — nor because it represented any great feat of engineering. Rather, the most impressive aspect of the new footnote feature in Google Docs was the timing of its addition.

According to Garett Rogers, who write the Googling Google blog for ZDNet, the Mountain View-based company added footnotes to their web application just two days after Microsoft CEO Steve Ballmer characterized Docs as a non-threat. “You can’t even put a footnote in a document,” he said.

It wasn’t the actual feature, so much as Google’s demonstrated agility in adding it that was impressive. “The agility, and horsepower that Google has behind it is something that companies — even Microsoft — should be wary of, and definitely shouldn’t take lightly,” says Rogers.

However, for all that, Google still has yet to do much more than take a nibble at Microsoft’s dominant office application market share. According to Microsoft, there are a whopping 550 million users of Microsoft Office around the world. Google Docs, meanwhile, only attracts a paltry 1.3 million visitors per month according to Quantcast.

Clearly, Google has a lot of work to do before it can undo the stranglehold that Microsoft has on the office software market. So where is the real greatest threat to Microsoft’s cash cow?

It might just be in desktop software from the open source world. Specifically, OpenOffice.org, which shipped a major version upgrade this month. In the first week since shipping version 3, OpenOffice.org was downloaded 3 million times. That’s still a drop in the bucket compared to Microsoft Office’s supposed user numbers, but what might be most potentially worrisome for Microsoft is that 80% of downloaders were Windows users. That indicates that Windows users are open to alternatives to Microsoft software (especially if they’re free).

OpenOffice.org head of marketing John McCreesh thinks that those numbers are actually undercounting Linux users, who usually get updates via their vendor. He guesses there might actually 5 million installed copies out there right now of the latest version of OpenOffice.org.

“[In 2004] we aimed to have a 40% market share by 2010. That doesn’t seem as ambitious today as it did four years ago,” says McCreesh. Well, if Microsoft’s numbers are accurate, that actually does seem pretty ambitious. But the numbers so far indicate that the greatest threat to Microsoft’s office software dominance might come from open source desktop software, and not from the cloud and Google.

One thing is certain: Microsoft is starting to feel pressure from all sides.

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