Microsoft (MSFT) Goes After Google (GOOG) Apps

Many observers who look at Microsoft’s (MSFT) move into server-based software think that the company will fall. Google (GOOG) already markets Google Apps which offers word processing, spreadsheet, e-mail, and presentation products. This software does not have to sit on the user’s PC. It is run from Google’s own server farms.

Microsoft’s business has always been based on loading its products onto PC and having the storage space, memory, and processing power of the machine do the work. Microsoft’s newest product match the Google Apps software and are prices about the same.

According to Reuters, "Microsoft Online Services is part of the software maker’s effort to capitalize on the shift by corporate customers to abandon their own in-house computer systems for "cloud computing," a less expensive alternative."

It would be easy to dismiss the change of heart at Microsoft, but it would be a mistake. It already has relationships with 90% of the PC users worldwide, including more corporations. Switching them to another Microsoft platform may be much easier than getting companies to adopt a new product from Google.

VMWare (VMW) told the world that Microsoft could not compete with it in the virtualizaiton software business. Based on the price of VMW stock and its revised guidance. Microsoft may be demonstrating that it can take market share in software businesses where it does not start out as the leader.

Douglas A. McIntyre