Google guns for Microsoft

... close to offering small businesses a suite for managing and storing files online. But the company still has to build its credibility with enterprise customers, analysts said.

"Clearly, Google could offer business customers free storage as an incentive to use its Web applications, but real demand is unlikely, in our view, until Google demonstrates strong security," Wolk wrote in a research note.

Directions on Microsoft's Helm said: "The next step is not the Google equivalent of PowerPoint, but a Web conferencing system. They already have voice and instant messaging. The next logical step would be the ability to work with presentations over the Web."

Whether or not big companies embrace Google Spreadsheets, enterprises are part of Google's long-term plans, said Forrester Research analyst Kyle McNabb. "The longer-term strategy at Google, I believe, is to let consumers influence the behaviour of enterprises. They're starting to articulate a scheme around enterprises now."

Increasingly, consumers are affecting the buying decisions in corporations. And Web technology, from wikis to hosted applications, is being adopted inside businesses.

Google can use the attention it has among consumers to make inroads into the corporate world, McNabb said.

Right now, businesses are unlikely to uninstall Microsoft Office in favour of hosted applications, said Gartner analyst Michael Silver. The right combination of attributes could make a "Web office" more appealing over the next few years, he said.

"The value proposition of Web-based applications is that they are almost as compatible (as existing applications), almost as functional, at some point, and they're really easy to manage," Silver said.

"The question is, when do we see a breaking point (for) when it's acceptable?" he said.

Office incumbent Microsoft, meanwhile, is developing Office Live, part of a companywide effort to make money from advertising and online services.

Rather than an online Web edition of Excel or Word, Office Live is designed to complement an on-premise installation of Office.

Office Live services, still in beta testing, offer Web hosting, email and Web collaboration to small businesses.

Because of its vast distribution network of retail outlets and PC manufacturers, Microsoft has a significant advantage over any Office challenger.

Google has, however, signed a distribution deal with Dell to pre-install Web and desktop search software on the PC maker's computers — something Google could expand over time with new offerings, McNabb noted.

"If Google does extremely well in the consumer market, IT managers will be hard-pressed to say 'Why shouldn't we?'" McNabb said. "That's the strategy that gives them an advantage over a lot of IT vendors."

"They have the advantage of having consumers' attention and they can use that in the enterprise," McNabb said.

Although it may appear an arcane matter, Google's choice of AJAX as its development strategy could play a significant role in its Excel compatibility, said Jonathan Crow, director of marketing at ThinkFree.

ThinkFree has written an offline desktop productivity suite using Java because that allows the company to provide strong compatibility with Microsoft Office formats, he said.

The company is also writing an online edition of its applications with AJAX, which will be less functional than the online version.

Google has been in the vanguard of AJAX usage. Its applications, including Google Maps and Gmail, helped set the bar for interactivity and features for Web applications.