Google Docs vs Microsoft Office

Ok I know right now this is no contest. Microsoft Office 2010 is a huge success in the 4-5 billion range per quarter and it is the ultimate cash cow. Anyone in business school would probably call Microsoft Office the definition of cash cow. They would be correct in doing so.  Over the past couple of years we have seen a new competitor come to the market in the form of Google Docs.  Competition to Microsoft is nothing new.  It has been tried many times before.  But I am seeing things a little differently with regards to Google Docs than I have in the past.  My son does his home work using Google Docs.  At my current place of work when we order out for food we place our orders through Google Docs.  A lot of start-ups choose to use Google Docs in order to cut costs.  These are things that just did not happen in the past   So what has changed and what is going on in the industry?  Lets look back and take a look.

When I started at Microsoft the competition was WordPerfect and Lotus 123.  Those two products feature wise were considered better than the Microsoft alternative Word and Excel.  But some bright people at Microsoft got an idea. Not so much a technology idea but a marketing vision.  Let’s create a bundle of products targeting the office space. And so Word, Excel and PowerPoint become the first bundled suite of office productivity tools. As a customer service rep it made for an easy sale as when customers asked a bunch of questions about products and were looking for both a word processor and spreadsheet application I could just say buy the bundle with presentation software and get 3 for the price of 2.  It was not so much sales as common sense. Over time Microsoft would standardize the interface between the applications, standardize the macro language, make it easy to cut and paste between applications add a database, Microsoft Access and many more over time.  Before the competition knew what hit them Microsoft Office was pulling in billions in profits.

This is not to say over time there were not efforts to provide an alternate to Microsoft Office.  There were.  Borland struck up a partnership with WordPerfect and they combined assets to create a bundled alternative.  But there was no standardization of the interface and no integration.  It was a rather weak effort.    Then they sold assets to Corel, a Canadian based outfit.  Now everything was under one house and they were going to capitalize on the open-source craze that was catching fire in the DotCom bubble.  When the bubble popped you never heard of Corel Office anymore.   Then of course there were open source efforts like StarOffice, out of Germany.  This was acquired by Sun who was acquired by Oracle and eventually everything transitioned over to OpenOffice.org.  This has received more traction than other competitors but remains relatively small   Like many open source communities, its audience tends to be very technical and anti-Microsoft.  The problem is they just cannot relate to real people.  Sales and marketing has a place in the product feedback loop.

Google Docs represents a new form of competitor.  There are a few things that make this a different and much stronger competitor.  From a technical stand point it is a cloud based application.  It just requires an account, no set up.   It provides 90% of what users need, which is primarily the ability to type and format.  Second, Google is an established company with lots of cash at its disposal.  It can continue to invest in product development and do the necessary marketing it will take to be an effective competitor.   If it takes ten years to get 10% market share they have the ability to wait that long.   Any company in the Office Productivity space who were to get 10% market share would inflict significant pain on Microsoft and specifically its share holders.  Finally there is the current Generation Y or whatever label you want to give them, but they grew up with technology.  They are not intimidated.  They are not beholden to any one company.  The idea of cloud based apps makes no difference to them.  In this “i” everything society they are quite comfortable with a SmartPhone, Tablet, Laptop etc..Breaking free from Microsoft Office is not that hard.

Which brings me back to my opening statements, which in short states that a lot of people are familiar with and are using Google Docs today.  The other competitors mentioned, you would find it hard to find people who know what they are or what they do.  With Google Docs anyone who has a gMail account has access to Google Docs.  The days when you receive a document and automatically you open Word for Windows, is no longer the case (this sometimes creates its own source of headaches for older people such as myself).  Google has done a great job leveraging its name to drive new services to customers.  They are gaining familiarity in the home as kids bring new technology home and then the next thing you know PTA members are sending you Google Docs.  To be successful in technology you need to go viral.

Down the road you can begin to see chinks in the Microsoft Office armor.  Everyone who uses Excel or Word say the same thing, “I only use about 10% of its capability”.  Which is true, it has become so big and bloated that a streamlined word processor like Google Docs has an opening it can penetrate.  Any College student working on a mid-term paper would appreciate the ease of use and set up of Google Docs, not to mention the cost savings.  College students are poor. Anything to save money and buy beer.  I see Google taking an Apple approach and penetrating the educational system.  The current economic climate only helps their cause.  It seems not a day goes by without a state or city announcing major budget cuts to education.  Every crisis kills someone but is an opportunity for someone else.

These are interesting times in technology as fundamental change in computing technology seems to be in the air.  It is a time for disruption.  Disruptive technologies change the industry climate.  Certainly the advent of the affordable PC changed how we viewed technology.  The internet created a connected society.  Mobility allowed us freedom.  The cloud could threaten entrenched players, who thought their business model was a birthright. Google seems to have jumped on this disruption early and it will be interesting to see if the Office folks can catch up.  They are trying with Office 365.  So far the only disruption they have caused is how I view a Word doc in Hotmail.  That would be disruption in a non flattering way.  The future is happening now.  Will it still be a business of billions of dollars or is disruption going to cause fundamental shift in revenue (someone is making money, just possibly not in the traditional sense).  Change is starting to happen in a fundamental way in traditional technology business categories.  The Office productivity suite will not resemble what we have today in 10 years, that is for certain.   It may be Microsoft Office, it may be Google Docs, it may be someone else.

Good Night and Good Luck

Hans Henrik Hoffmann October 25, 2011

Windows 8

Why do I feel like I have been here before?  Probably because I was when Microsoft launched Windows 95 16 years ago.  It was the biggest release of an operating system ever.  It was really the first technology release with a massive amount of hype prior to its release to the public.  It ushered in the famous “Start” button, that is still with us today.  Has it been there that long?  Hard to believe how time flies.  Now 16 years later Microsoft is ushering in a new era of Windows with the developer release of Windows 8 at the Microsoft Build Conference in Anaheim this past week.  So far the reviews have been very positive, yes some concerns, but overall it sounds like Microsoft is getting the picture.  Windows 8 uses the Metro interface, found today on the Windows Phone.  But more importantly it’s about touch and enabling a better user experience across multiple device from factors.  Lets take a look at the good and the bad.

What I found interesting and exciting was what they were able to do with new hardware designs that include the ARM chip and stateless hard drives.  It was noticeable with faster boot times, which for Windows in particular has been a holy grail.  And though Steve Ballmer claimed Windows 7 did this, Windows 7 did not deliver.  It’s a simple request (though not trivial to build) that had to be done.  It’s amazing what the push of a button can do to your market share.  The other area is power consumption, who is not tired of a 2-3 hour battery life?  Though battery technology has not yet solved this problem, changes in the hardware that make up your PC have improved that allow us to reducing the amount of moving parts hidden in your PC thus reducing the heat omitted from your PC or Tablet.  We have not reached paradise for battery life and power consumption but we are getting closer.

Back to my opening comment the user interface has been completely revamped adopting the Metro interface, from Windows Phone 7.  My one dig at MS is having basically the same UI for over 15 years is rather unacceptable.  We have had the same Start button all these years.  But this is a more than welcome change.  The Metro interface provides the “touch” experience with its sexy panels.  It is very important with the rise of the tablet.  The explosion of new and exciting designs in hardware coupled with the need to have a great touch experience will make Windows 8 competitive in the space currently being owned by the iPad and Android.  It will be new for developers, in particular those targeting ARM, as it’s required.

Another positive is it may make Google and Apple pause and look at what Microsoft is doing.  I know that may sound odd, but right now in the area of mobility Microsoft is non – existent.  With Windows 8 it gives Microsoft a chance to be relevant and feared once again.  To date Apple and Google have not really paid much attention to Microsoft as Microsoft has been viewed as yesterday’s news and a company that lacks imagination.  The reinvention of Windows and the fact that it is able to go across device form factors will be a huge plus for Microsoft and help it gain traction in the tablet space.  Tablets will not be as easy to gain market share as Netbooks, beyond technology it will take a strong marketing campaign to reach the appeal level that Apple and to a lesser extent that Android has.

There will be challenges.  One I thought of right off the bat as I read Jay Greene’s live blog was that the Build  event lasted over 2 hrs was there is so much new stuff in Windows 8.  This goes to a Microsoft issue, which they cannot not adhere to the old grade school acronym KISS (Keep it simple stupid).  They put so much stuff in the product that they overwhelm developers and consumers as they simply cannot consume all that is being given to them.  We buy technology products that makes us happy and improve our lives, we do not want them to confuse and frustrate us.  But over the years Microsoft has developed a habit of trying to show cool features, no matter how geeky they may be.

Another challenge is legacy.  Microsoft and the Windows empire has been a partner driven model  throughout its entire existence.  The partner model has created over thousands of peripheral devices from printers to scanners to mice.  You have tp go back a certain amount of years to make sure all those investments by consumers and businesses are protected.  This is no small task.  There is also the question of the user interface, which they did show at the conference, but you just can’t tell everyone that Metro is the new UI.  So you build in a mode that allows you to switch to the old interface (this was showed at Build).  This to me, takes away some of the sexiness that Metro provides.  Rather than saying we are new.  You end up saying we are old and new.  A subtle but big difference

Then another negative was Steve Ballmer.  On day two of the conference he made a surprise guest appearance.  Unfortunately he for got what decade it was.  He went on and on about how many desktops were deployed and going to be deployed with Windows 8 and that developers should all write applications for Windows 8.  It would have sounded great in 1995.  The problem is it made it sound like he is not following what’s going on in the world.  That developer are not writing desktop based applications, pretty much everything is being written to the internet and it needs to support Internet Explorer, Safari, Firefox and Chrome.  This is not new news.  I was having drinks with the Microsoft C++ Program Manger a few years ago in San Jose and he brought up a statistic that stated 75% of all app development today is done on the web.  Maybe Steve should talk to him.  I heard from several people his keynote was a negative on the week.  He even went so far as to ask developers to “stay with us”.  Apparently there is  concern they may be going somewhere else.

Steve did talk about re imaging Microsoft,  I find this both a negative and a plus.  It’s a negative because you have to do it.  It’s a positive because you are doing it.  To change the image of a company is not easy.  Especially one that has had the impact on society both economically and culturally like Microsoft.  But there is no question it needs to be done and the changes and progress that have been made with Windows 8 offer up a great time to do that.  It is all about execution now and delivering Windows 8 before the holidays in 2012.  In addition the right “buzz” is going to need to be generated, coming off of Build a good start was made.

Over the next 12 months it should be a very exciting and stressful time in Redmond.  The pending launch and release of Windows 8 can be and will be one of those defining moments in technology.  Not just for Microsoft but the industry.  We have grown up in a Windows world where over 90% of all PC’s, Laptops, and Netbooks were Windows-based.  However withe rapid evolution of new form factors like the tablet this world is increasingly under a dark cloud as the storm is upon us.  With the possibilities in emerging markets, it does not seem clear that they will follow or want to follow the same path of North America or Europe.  Nor will they have to as it’s apparent they will have alternate choices.  With the increased competition in the global market for technology a resurgent Microsoft can only benefit the competitive landscape, but we will have to wait until Windows 8.

Good Night and Good Luck

Hans Henrik Hoffmann Sept 20, 2011

Dear Tim Cook – Learn from Steve Ballmer

Dear Mr. Cook

I am sure you are settling into your new role as Apple CEO, wondering how do you succeed a legend? I can only imagine it is a daunting task. Speaking from experience though I can say I have witnessed the good, the bad and the ugly of what can happen.  I was at Microsoft when Bill Gates decided to step down as CEO of Microsoft and handed over the reigns to his self-appointed successor, Steve Ballmer.  At the time things seemed to go so swimmingly as it was never in question who would be the successor to Steve Ballmer.  Things have worked out far differently than those of us who were around would have predicted.

I have been a witness to greatness as I had the opportunity to listen to BillG speak many times.  His ideas and vision for Microsoft and the industry always so crystal clear. As if they had been freely floating around in his mind since the day he was born. As change took place in the industry, Bill always seemed  to understand it, to grasp it and to be ahead of it.  This is not much different then Bill’s chief competitor for the top spot in tech history, your former boss Steve Jobs.  Steve seemed to understand the impact technology could have on day-to-day life and what it emotionally meant to people, and most importantly how to get there.  But these chapters are now closing and it’s time for your chapter, but let’s hope it is better than Steve’s.

When SteveB took over from Bill he was the golden boy.  He was much revered and loved in the field sales force.  Many of us considered him one of us.  Unlike you he even had the benefit that Bill would hang around for a while as Chief Software Architect.  And for a while things seemed to look like they would work out ok, or so we thought.  He was being given the opportunity to lead the future, not just of the industry but of a company that had made changes in the world, in the way we live..  But cracks in the armor were starting to show.  And that is my first bit of advice to you which is old advice, big things start small.  Both the positive and the negative.  We started to see some of the tech guru’s leave the company, most notably Paul Maritz.  Even though I revere BillG he had a circle of people around him that was his think tank. People he could turn to and have those deep discussions on the state of the industry and where it was headed.  Today I don’t know who Steve listens to these days for advice and guidance, but he has become an increasingly isolated figure.

Point two, remember the core of who you are and what makes you great.  It’s easy to look at others success and think it may be a good idea to emulate, but don’t do it at the cost of what got you to where you are.  As Microsoft grew managing growth became a paramount obsession for Steve,  He really fell under the guise of Jack Welch and the GE model, trying to apply those ideas to Microsoft.  The problem was that though it worked for GE that does not necessarily mean it was a good fit for Microsoft.  Over time the passion that was so core to Microsoft seems to have dissipated and been replaced by big corporate politics from the top to the bottom.  It has created an environment where people are more interested or fearful in doing the politically wrong things versus doing what’s right for the company.

Point three is drive the industry and don’t let it drive you.  This to me was a direct result of point two.  When I first started at Microsoft, the idea of standards and specifications were something that Microsoft was directly involved in and trying to drive a major influence in bending them to what Microsoft saw as the right direction for the industry.  It was important that Microsoft be viewed in the lead on technology.  As new start-ups and technologies have come forward Microsoft has chased these new opportunities, thinking they could catch up like they did in the past and taking their eyes off the core standards.  A case in point was HTML5.  While Microsoft was pursuing Adobe with their Silverlight Player and Smooth Streaming, Apple rightly saw that the right thing to do was support the new standards being developed for playing media files, HTML5.  Thus causing Microsoft to do yet another about-face.  This type of mistake can be blamed on product groups, but ultimately these type of visions start at the top.  Which is why your mentor was on record as saying the future is HTML5, Microsoft has seemed to stutter and fail with each new change in the industry and ultimately be viewed as a laggard.

Microsoft back in the day was always fearful of falling prey to a company that was smaller and hungrier than they were, Steve was certainly involved in a lot of those discussions.  It was an obsession of  the executive teams. However today that does seem to be exactly what is happening to them.  It has everything to do with that they forgot all about those fears and took their eye off the globe shaped ball predicting the future.  Nothing has changed in the industry.  This remains an industry where small start-ups innovate and create the next generation shifts in the technology industry.  You and I have both seen companies like Facebook, Google, Twitter, Flickr, Pandora, Linkedin, Dropbox etc. emerge within the last 10 years.  Some of these will grow very large and some already have, some will fail.  The only guarantee is that there are more to come, so pay close attention to who they are and where that are taking the market place.  And most importantly capitalize on it.

In conclusion Mr. Cook you have been granted an exciting challenge and opportunity at what today is the most admired company in tech.  The pipeline is solid for product delivery over the next five years.  Be true to who you are, but more importantly be true to who Apple is.  I don’t want to see you become a Steve Ballmer,  it has been painful to watch.  At the same time as I have outlined there is a lot you can learn.  The one guarantee I can make to you is history always repeats itself, but you do not need to be the one to repeat it.

Good Night and Good Luck

Hans Henrik Hoffmann  September 7, 2011

The App Store Craze

I was at a family event and all my nieces had a iTouch. I had never played withe the iPhone or iTouch at this point so when handed one I gave it a drive. First I ran some YouTube videos. A soccer clip of at the time Manchester United player Christiano Ronaldo. Connected to the house wi-fi it performed really well, which was an eye opener compared to previous experiences on my Windows Mobile phones, which frankly you just did not try. then with the wave of my fingers I cruised around the iTouch software. Soon I landed on what I viewed as a boring feature “The App store”, then with a simple touch if my finger a new world was opened up.  At first I could not believe how fast I was moved from one screen to the next and then all the options available to me, either for free or for purchase.  The categories available, the large number of apps available was all very impressive and very different from my previous experiences with mobile applications.

Prior to the app store developing apps for mobile devices was painful and not very profitable.  The first problem was which mobile phone did you write to?  Symbian, RIM, Microsoft, etc..Then their was the carrier issue as each carrier wanted to own the ecosystem.  I had to choose between Verizon, T-Mobile, AT&T, Sprint etc..it was a real pain in the ass.  Not to mention that by the time you broke it all down there was not much of a market to go after.  Then ever if you did write the app the user experience of finding the app and loading it was long and painful.  Lastly the applications you downloaded were not very good or enjoyable, largely because there were not that many available.  It led to one conclusion writing, selling and running mobile applications was for the world of mobile geeks, other than that don’t bother.  Apple solved all three problems by owning the ecosystems, providing lots of applications and making it easy for everyone to get access, find and download what they wanted to.

Now it seems everyone is playing catch up with Apple – Apple has over 500,000 applications, Google has 200,000 – 300,000 and beyond that not a whole lot of applications or excitement for the other players in the space;  Microsoft, RIM, Nokia etc..Microsoft is already discussing Windows 8 and including an app store for the OS.  One  question is how many successful markets will there be?  It’s apparent for the foreseeable future there will be two but a third?  I will be interested to see what a Windows 8 store means.  We are talking about the desktop after all and will it mimic the Android or iPhone app store with a bunch of free and low-priced apps?  This would mark a paradigm shift for the desktop as traditionally you bought apps that costs into the hundreds of dollars.    What will the Windows 8 tablet look like and will it be successful?  Another burning question are Windows developers like their counterparts in the Apple and Google world. interested in low-priced slash high volume sales?  The one thing I think Windows 8 does have riding for it, is it can be different, since it’s legacy is the desktop.  For RIM it’s harder as they are targeting just a mobile platform and thus cannot differentiate.  For RIM the future I believe is only a painful one.  Then there is Nokia.  I have yet to see or hear what their plans are – will they just consume off of the Windows 8 app store, thus ceding the whole app store revenue stream to Microsoft? It seems there can be only one here.  But that it the downside of Nokia letting Microsoft be their primary partner for the mobile OS will deprive Nokia ownership of the ecosystem.  Nokia can claim what it wants but its survival is dependent on Microsoft’s ability to deliver in spades.  More so from a sales and marketing front than a technology front.

Is there another paradigm to be explored?  Something around the corner we have not seen yet?  Without question there is, but I think sometimes we think it is something not invented yet, when many times it is something from the past yet re-hashed and improved.  The mobility phenomena will continue to evolve. We are always connected but the experience will continue ti improve as 4G technology becomes more prevalent.  Before you know it we will be up to 5G and 6G (if it is still called that).  The traditional software pricing structure of 90% margins is being torn down and that will continue as new indirect revenue models take its place.  It is just beginning in the area of mobility.  Soon you will hear of huge revenues from mobile advertising used to subsidize software development.  Ray Ozzie at Microsoft discussed this in his first memo at Microsoft.   For some it is just hard to take the plunge.

The App Store craze is here for now and how long it will be is hard to say, but how we acquire our digital delights will move away from packaged software, similar to how we download music today or stream movies.  The winners will be those who committed and as we see in Apple’s earnings calls probably has already been determined.  The key to success will be creating an experience that us simple and useful.  There still is opportunity in the areas of the cloud, in particular in small and midsize business and the enterprise.  There are companies making their imprints, such as Salesforce.Com, Amazon and Rackspace, but the game is still wide open.  It’s interesting to note in the last decade how the cutting edge of technology has moved from the ivory towers to the hands of our teenage kids and the impact it’s had on traditional tech powers.  The days of home desktop productivity software at $500 are over as the app store has created a mass market shift in how we consume our software and how we expect it perform.  There are those who can choose to take the plunge into the deep or perish in the tidal waves that follow.

Good Night and Good Luck

Hans Henrik Hoffmann August 23, 2011

Is Apple a threat?

As I a watch with a great amount of envy the success Apple is enjoying its always fun to hear the critics. It is always the same story about too much control, no flexibility, a single entity dictating everything, in short it’s about power. A glaring human weakness that these days is finding more comfort in big corporations rather than big governments. In the industry of technology it seems to take on a heightened significance.  After all technology is about defining the future based on what does not exist today.  Much like the classic tales by Jules Verne and H.G. Wellls, we peer into that future with a bit of foreboding and cynicism as it charts un-tread waters that threaten the soul of humanity.  Apple is enjoying a run of success that seems to be defining our future interaction with technology. It seems natural that those old fears would surface.  It seems the human soul is always threatened.

To retread some of history, before we move forward, this sence of doom is not new.  In the old days some 40-50 years ago the technology threat was IBM.  There was a time where IBM spoke and the whole industry just followed in their coattails. It led to many concerns and protests within the industry.  However the rest of the industry had a friend, I simply call the Department of Justice (DOJ).  While they spent many hours in court a new revolution took hold called the Personal Computer (PC).  In a twist of fate IBM would give the rights to the software operating system to a small company called Microsoft.  Before long Microsoft had 90% market share and the industry began to cry of too much power, a single company dictating to the masses, but once again the industry had a friend to turn to, the Department of Justice.  While millions of dollars were being tied up in court the industry did an interesting thing…it changed.  New things like ad driven revenues via search were created and the term mobility took a twist to mean more than just a mobile phone providing voice services.  Before we knew it Apple had returned from the dead and new names like Google, Facebook and Twitter, to name but a few were now the face of the technology industry.

Why do we fear control by a single company – that ability to define what the industry will do and when they do it?  In some instances it is misplaced.  A large part of the fear is not created by the market but by the industry insiders competing against the perceived leader.  There are a couple of areas to consider, one is the developer and two is the competitive landscape

Developer, rightly or wrongly, are the gods of the computing world. for ultimately they bring our imagination to life. There always seems to be this mood against locking developers into a single “stack” platform, what god would be locked into anything? .  Having spent a fair amount of time with developers, they go where the business is plentiful.  Code is code, whether the developer is using Visual Basic or C the difference is not great enough that the VB developer cannot learn C or Java.   The fact that Apple has an army of developers using Object C, which is rather ancient is a testament to Apple’s ability to generate end-user excitement, which then brings an army of developers to their camp.  SO the fact that they are writing in a language that is over 30 years old is not a relevant point.  They are chasing the money, which always seems to be a relevant point.

The competition certainly fears control as it minimizes them.  No one is talking Windows Smartphone, because at least for now there is no business.  Even when Microsoft or HP (remember they bought Palm) talks about a developer platform it is treated rather silently in the press.  When Apple talks it’s like EF Hutton (older folks remember those commercials).  The room goes quite and everyone listens.  Does Apple control the press to?  I am sure to some it may seem like it, but the press is smart and goes where the news is best.  In short they don’t.  It does leave the competition in a quandary.  Do they try to forge their own path, very hard to change perceptions.  Do they play along with the devil?  It could be profitable, but the flip side is it could be suicide.  The biggest fear I would assume is just the fear of being shut out of a very lucrative market.

Could Apple gain a position where they dictate to everyone what their technology experience will be?  Could they be in a position to tell partners and competitors who gets to play in their pen?  Perhaps as it’s an age-old fear.  I am sure some felt that way about the American big three automakers at some point in time – they controlled manufacturing, distribution etc..but does anyone feel that way now?  I am not a free market purist, but the market is efficient.  As long as Apple does not get to arrogant they could influence the market to think the way they would like them to.  I would say so far they seem to be doing a pretty good job of it.  Apple’s iTunes represent sa good example of Apple and the market holding the record labels in check.  The record labels would love to dictate to Apple the  terms of music pricing, but due to the popularity of the iPod they are more or less to listen and adhere to Apple’s pricing guideline.  The music labels make money (I have been told by one of the music labels they get $.20 of the $.99).  The labels would probably like to own the whole channel, but it gets way beyond their core expertise.

At times technology companies get to seem so powerful that they could control their destinies by sheer will power, but at the end of the day it’s people who choose where they want to spend their dollars.  If the fruit looks rotten we don’t want to eat it.  The consumer ultimately decides if a company like Apple is providing an experience they want to buy and participate in.  It’s also a very American condition to build up the big guy and then tear him down when we feel their ego and success has become too big for their own good.  Why do we all hate the Yankee’s and Red Sox? At the end of the day I don;t think Apple is a threat to the industry or society, but just in case we should keep our eyes and ears open, because if we don’t , well maybe then they will.

Good Night and Good Luck

Hans Henrik Hoffmann August 10, 2011