Apps vs. Office: Google Ups the Ante

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There also have been two purchases to better compete with Microsoft's ubiquitous PowerPoint slide show software. In April, Google bought Tonic Systems, a provider of online presentation software. And in June it acquired Zenter, whose software lets users share slides over the Web. A spokeswoman says Google plans to offer such applications this summer.

Despite the convenience of accessing Google's Apps from any computer with a Web browser, the company does see a need to borrow something from traditional software's playbook: It plans to enable users to work offline with the suite, a nod to the reality that workers don't always have Internet access, be it during a flight or in a remote corner of a developing market. "We need the apps to work well," says Google co-founder Sergey Brin. "It sucks to not be able to use it on a plane. We're not the only ones to have these issues."

big cost savings

Amid these challenges, Google's business suite carries a decisive advantage in terms of cost, which remains free for smaller enterprises and priced well below the competition for larger organizations. Thanks to the vast battery of computers already in place for Google's search business—thought to be hundreds of thousands of machines—the added cost of serving productivity applications is very low, says Jeff Huber, a vice-president for engineering at Google.

Andrew Johnson, chief information officer at SF Bay Pediatrics, is a fan of Google Apps. The San Francisco medical practice uses Google's spreadsheet to create a record of incoming calls from patients that's shared by receptionists and nurses. When a call comes in, the receptionist types in the particulars—a baby with a 102-degree fever, for example—so a nurse can read the notes while the parent is on hold, then pick up the phone to discuss the child. The doctors, meanwhile, use Google's word processor to create a library of fact sheets on assorted medical topics to distribute to parents of patients. The doctors also use Google's spreadsheet to schedule their office hours and hospital rounds.

Johnson says SF Bay spends about $1,200 a year for Google Apps Premier, a fraction of the roughly $10,000 it would have cost to install software from Microsoft. He says he looked at other Web-based software, but decided Google's size and reputation makes it the safest bet.

Limitations Linger

For some users, however, Google Apps may not seem ready for prime time, as the applications aren't nearly as robust and versatile as Microsoft's. Enzymatics' Sachs says when his company needs to print a professionally formatted document for publication, "we do that in Word." That's because Microsoft's programs offer sophisticated controls for formatting documents, creating footnotes, and inserting photos—features that Google's software lacks. There's also no easy way to transfer data between some of Microsoft's applications and Google's Docs & Spreadsheets software. "It becomes like a one-way street—when things get taken out of Docs & Spreadsheets, they stay there," says Sachs.

Comments like those suggest Google faces an uphill effort against Microsoft in the corporate market. While Brin says "we don't think about Microsoft," it's plain that Google will need to woo present and former Office users if it hopes to transform Apps into something more than a financial afterthought.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.