The State of Office 2.0 and its Future
Over the past 10 years, Corel, Sun, IBM and others have tried to compete with
Microsoft in the office software business, but thus far none of them have been able to take a
significant chunk of Microsoft's large market share, which generates revenues exceeding $15 billion each year. These companies have tried everything; including Sun open sourcing their StarOffice suite and releasing it as the
free OpenOffice. Yet, even this very compelling move has not
been able to make a serious dent in the market.
However, with web 2.0 and the rise of Rich Internet Applications there are renewed hopes for entrepreneurs to be able to compete with Microsoft's Office juggernaut. Now these smaller players can leverage the sharing & collaboration capabilities of the Internet, remove installation & maintenance frictions, and provide globally accessible office software.
Competitive Landscape
By snapping up Virtual Ubiquity, Adobe has become the latest player in the web office market, but Google, Yahoo!, Zoho, and even Microsoft, are all established players in the game as well. Let's take a look at all of the major contenders and their strategies:
Google, whose web office solutions are based on AJAX, probably has the strongest and most clear online office strategy among the big companies. In order to provide offline capabilities (still a must for many, especially outside the USA) Google developed Google Gears, which is a set of browser plugins and Javascript libraries that enable AJAX applications to run offline.
Google built its web office suite via acquisitions. The startups they have acquired are: Gtalkr (instant messaging), Writely (word processing), iRows (spreadsheets), JotSpot (wiki), Tonic Systems (presentations), and Zenter (presentations). By acquiring outside talent in the web office space, Google was able to bring together a team of well focused engineers to execute their Google Apps vision.
All of Google's offerings are freely available thanks to their ad-based business model. For enterprises, Google offers an ad-free subscription based model.
Google is betting on centralized servers and thin clients. That's why they are spending $600 million to build a new data center in North Carolina - the purpose is to provide 100% uptime which is a must for enterprise grade acceptability.
Microsoft, the old stalwart of the office software space has a dilemma: they need to find some way to simultaneously compete with the free web based offerings from their rivals, while not hurting their existing massive revenue stream from their ubiquitous PC-based office suite. For that reason, Microsoft is not in a great position to make bold moves in the web office market.
Perhaps that's why Microsoft's vision is evolutionary, rather than revolutionary. Microsoft doesn't believe in Google's thin client model and it betting that people will continue having strong computers at home and in the office. Microsoft is not trying to centralize software, but instead keep it on the client side. In traditional terms, this means more privacy as well.
That's why, with Office Live, Microsoft is centralizing only the data storage tier. Microsoft's assumption is that every computer will have Microsoft Office installed - that's why they are readying the release of a free, limited and ad-supported version of their Office suite. Further, like Google, Microsoft recently invested $550 million to build a massive data center in San Antonio, with the purpose of providing full availability for its upcoming enterprise grade services.
Making Office free and universally accessible seems like a good idea, but personally, I'm skeptical of the user satisfaction level in a world where all applications are shifting to the web.
Yahoo! made a late entry to the web office market by acquiring Zimbra for $350 million in mid-September. Zimbra is certainly a great web-based enterprise application provider and will bring a lot to Yahoo!, but Zimbra focuses mainly on groupware features and competes directly with Microsoft Exchange - not Microsoft Office. It is not yet known what Yahoo! will do with Zimbra. They could choose to focus on its office functions (spreadsheets, word processor) and take them out of beta. Or, alternatively, it may use Zimbra to position itself as the leading email communications company, with both hosted, ad-supported (Y! Mail) and ad-free, enterprise (Zimbra) offerings, rather than compete directly in the contentious online office market.
In any case, by following Zimbra's approach, Yahoo! appears to be betting on a decentralized office 2.0 structure. Maybe that's because Yahoo! does not want to invest in beefy server farms like their rivals, which is risky, and possibly is more concerned about privacy than others.
Yahoo! was not the only major player to enter the web office space in September: Adobe's Virtual Ubiquity acquisition seemed to announce that company's intention to compete for online office market share. Adobe uses its Flash and Flex technologies to power its fledgling office suite. However, there are some obvious concerns here:
- Adobe is inexperienced compared to rivals such as Google, Yahoo!, Microsoft at offering hosted services
- Enterprise-grade acceptability of Flash technology as an office suite backend is questionable
Alternatively, Adobe may have less ambitious plans and the reason why they snapped up Virtual Ubiquity may be to showcase the possibilities that the Flex platform can bring.
Zoho is not as big or as well funded as the aforementioned players, but offers perhaps the most complete office suite on the Internet. Similar to Google, Zoho has a fully centralized approach and its solutions are based on Javascript technologies. Zoho's suite includes a word processor, presentation app, spreadsheets, wiki, CRM, web conferencing, project management, and much more. However, one problem that Zoho faces is that their applications are loosely connected. There is no single sign-on and sharing capabilities are weak or nonexistent between most of its parts. Trust among enterprise users may also be an issue - large corporations may feel more comfortable keeping their data with a public company. These factors put Zoho in a good position for potential acquisition.
Others
Smaller players, such as ThinkFree, suffer from being based on deprecated technologies like Java Applets. There is also gOffice, which seriously lacks usability.
Surprise Player, meebo?
meebo is one of the most successful online instant messaging clients, but with this week's annoncement of a platform there now exists the potential for a lot of development to occur around their user base. By allowing third-parties to tap into meebo's communication platform and users, the company's new development platform could actually be used to create intriguing web office applications. Below is a mockup of what a meebo platform app might look like:
The picture above imagines Google Presentations embedded into meebo.
Conclusion
Finally, we may see new web office attempts from Sun (JavaFX) and Laszlo (OpenLaszlo) - because, like Adobe, they are working hard to prove the readiness of their RIA platforms for the enterprise.
In any case, the future is online and all software makers will need to make their applications available through the web. For me, the big question is whether Google's thin client model will work or not. This model would lead us to live with dumb machines that hook into Google's server farms to do any real computation.
What do you think the future of Rich Internet Applications and specifically the online office will look like? Leave your thoughts in the comments below.
Share
Comments
Subscribe to comments for this post OR Subscribe to comments for all ReadWriteWeb posts
Google's exclusive focus on AJAX could start to look a serious weakness when Microsoft's .NET framework becomes available as an RIA platform in the shape of Silverlight 1.1 next year. Although it might not have much street-cred in some quarters, the framework is highly respected where it counts most for this market, the corporate IT departments.
Admittedly the current trend of desktop applications being implemented and offered online sends shivers of excitement and anticipation down my spine. A whole new perspective on the design, development, and usage of software has emerged. Just thinking about the possibilities is so exhilarating!
However, I cannot be but feel concerned about this statement: This model would lead us to live with dumb machines that hook into Google's server farms to do any real computation.
Does it mean that we are moving towards a tomorrow where since we are mostly just using thin and dumb clients tapping on the processing of certain firms, we can do almost nothing without these firms? At least to me currently, it seems almost certain that only big firms like Google, Microsoft, and their like, can afford to maintain the huge computing resources that millions of dumb thin clients can connect to to get their processing done.
There is also the issue of privacy here concerning trade secrets, inventions, IP, and personal privacy. Are all these going to be compromised when we have little alternative but to process and store these on the server farms of the above-mentioned big firms?
To me it seems that Microsoft is in very good position for next 2-3 years, till something very revolutionary on privacy front happens. And Google must aquire Zoho to become a contenter in enterprise space
I think while the trend of desktop applications moving online is surging (Hell, I have even read somewhere that Adobe is working on trying to make its Photoshop suite available online!), there will probably come a balance point between online applications and traditional desktop applications.
While applications shifting online improves collaboration, reduces installation and versioning woes, and allows pay-as-you-use pricing models, there will still be a market and a place for desktop-bound applications.
But I expect as well that these future "traditional" desktop applications will probably not be as desktop-bound as they are now.
The strategy of Google is probably more longterm strategic: first get the current school/University students used to their online office 2.0 tools. Then in time, when they move up to management positions, they will not have a problem with applying the same tools for their whole enterprise. Current managers of course have had massive "imprinting"/brainwashing from Microsoft the past 2 decades.
By that time, when it will seem normal for people to use Office 2.0 tools, we will also not be using just our desktops. We will be logging in to and using the office 2.0 tools from our car, mobile phone, tv, watch, ipod, whereever.
With something like 200 billion in cash to burn, Google can afford to take a long-term view on things....
Google's JotSpot is not "freely available".... new signups have not been allowed for well over a year, which is a shame because it would be nice if it was available. Seems like that is worthy of a story all by itself.
@Duncan Lamb: just wait. They've promised to make it free; they should be working on integration.
@Chris Rijnders: it's not cash, market cap, a virtual amount...
@Joshua: with permanent connectivity - which is the future IMO, it's possible.
As far as a roundup of "Microsoft Office" competitors from a Microsoft-to-apples standpoint, I think your overview is reasonable (though a single word processor acquisition and meebo's addition seems like a generous give).
The part that's missing for me is the "office 2.0 and future" part. Emulating electric typewriters, flipcharts and spreadsheets is a 20 year old paradigm and whether you do that as web apps or not doesn't address the fact that people don't work in a fully file-centric world.
Office 2.0, Enterprise 2.0, whatever you want to call it--these concepts should include the aspect of social productivity and collaboration, not just file production. There's a ton of value lost way before/after a file is ever created that's not being captured, and it's the solutions that take a broader approach for easily capturing and organizing that unstructured, highly valuable content (as well as providing a place for files/assets) that we think will win.
Considering Google's resources, its online office services are disappointingly shallow. I think that customers are going to expect the same or near to the same depth of services and connectedness in their online apps that they are used to in their Microsoft desktop apps, and Microsoft's unique ability to deliver that depth is what will give it the edge in the Office 2.0 race.
If Google does indeed envision a move towards a world full of thin clients, it's interesting to note that one brake on that evolution will be the gaming market. 3D games continue to grow in appetite for both local storage and cutting edge technology (i.e. video cards, CPU, RAM). Much of the improved performance in the PC platform over the last decade or two we owe to the gaming market.
One could argue that the console gaming platforms might edge out the PC's continued evolution, but as far as I can tell, the console platforms have done more to expand the gaming market in general than to really significantly hurt sales of PC's. Right now we need highly capable PC's for a variety of reasons, and for many consumers, it just doesn't make sense to get a powerful PC that can't also play games.
I have bought into this movement, migrating my 'office-like' tasks into Zoho. I've been equally impressed with Google's product. From the article and user comments above, it sounds like that large companies involved are spending the money to make their products even better, even enterprise level. Maybe this is just the tip of the iceberg.
@ #4 Joshua - An online version of Adobe Photoshop is in the works.
IMHO the question is how important collaboration, broadly defined, is for Office suites. MSFT Office is a good product and if you buy Student/Teacher edition (which anyone can off Amazon) it's dirt cheap -- probably cheaper than any paid 'subscription' Office service is/can be. Hence no real need for Open Office. But if collaboration is the key, MSFT cannot compete on the low-end today but Sharepoint is rocking on the higher-end.
I'd echo sam's comment about the power that these online apps have in terms of collaboration. The days when a single person creates, edits and delivers/prints/presents a file are on their way out at large corporations which is why I think these players are targeting students, start-ups and other remote/dispersed workforces first - users who situations mandate that they use collaborative tools. It will trickle into larger businesses with natural employee turnover and mergers and acquisitions.
It's also interesting to note the benefits these apps have in terms of being friendly even when you don't have your main PC around (ie: text and photo blogging from a mobile phone, updating a project plan on apps lke 37signals backpack or basecamp from any web-based e-mail client). I haven't found a way to do that with MS Office yet so I use these apps to augment it (and I do work for a large company).
Seamless Integration is the answer. Not a replacement to the currently segmented series of half-naked products.
Adobe's acquisition of Virtual Ubiquity and their Buzzword online word processor might seem of minor import compared to Google, Zoho, and Yahoo/Zimbra. However, as someone who's used all of them I can say that Buzzword is by far the nicest of the bunch. Whether this is do to Flash/Flex beating out Ajax, or just better product design, Buzzword is a pleasure to use. If Adobe continues to improve it (I don't see Google making much progress on beefing up their office apps, which remain a bit frustrating to use), and follows up with other office apps, they could be a player in this race. Hard to see Adobe getting into calendar/email type collaboration apps, but who knows. Maybe they'll buy 30 Boxes and some other companies.
As a knowledge worker who collaborates with widely distributed team members on multiple platforms, I'm happy to see all these competitors in this space- only good things will come of it.
Office 2.0 is a lot more than just online docs and spreadsheets.
It’s all the tools, tips, and tricks that help you to get the job done no matter where you work.
It doesn't really matter if these tools are online, offline, or a mixture of both.
My Office 2.0 setup is not 100% online. I use a combination of things to keep me organized and productive.
The real benefit from Office 2.0 will come in enabling collaboration, business process management, taxonomy, metadata, mashups, etc.
Knowledge has no value when it is stored - it only has value when it is shared and applied. Addressing all the pieces of the people, process and technology puzzle will reveal the hidden potential in both yourself and your organization.
Office 2.0 will help you tap into and release that knowledge in your workplace community.
Why is it that when "office online" is mentioned now days people forget the Microsoft moved the goalposts again... Its no longer Word, Excel, Outlook and Powerpoint..
The complete Office 2007 suite looks a bit like this :
Access
Communicator
Excel
Groove
InfoPath
OneNote
Outlook
PowerPoint
Project
Publisher
Visio
Word
and (apparently!):
SharePoint Designer
FrontPage
But here is the important bit and where the goal posts moved. Server Components :
Forms Server
SharePoint Server
SharePoint Server for Search
Groove Server
Communications Server
PerformancePoint Server
Project Portfolio Server
Project Server
So Microsoft, or at least Microsoft partners are offering hosted Sharepoint servers as a starting point. Well suddenly I'm using a nice features rich application on my desktop with a centralised, searchable server infrastructure to store it on which is accessible over the web. What a sensible way to webify desktop applications, rather than try and shoe horn a features rich finely honed user experience into a browser.
Sure Sharepoint leaves a lot to be desired, but it has moved forward the "office" environment from being a set of stand alone application to being a system of inter-working tools. Sharepoint is the paradigm of Office 2.0 (Wooooo lets get MORE arbitary versioning..) that other tools will be judged by. Hopefully someone will develop something better and force Microsoft to improve what is currently a product that needs a real polish...
I'm sceptical of the phrase "in a world where all applications are shifting to the web", on a day to day basis you know how many web based applications I use to do my job? I'll tell you, 1,.. web based mail, same as I did 10 years ago.
The only way I can see that desktops will turn back into dumb terminals is via application virtualisation through products like Softgrid. ...... I wait that to be quoted in one of those "What a stupid prediction" lists in 10 years time... but I reckon I'm safe from embarrassment on this one
The thrust of Office 2.0 should really be about taking advantage of all the unique things the web offers -- collaboration, portability, integration/mashups with data from multiple locations, etc... not just attempts to replicate the interface we're used to on the desktop. This is the differentiator where the innovation needs to keep being pushed. Google Doc will not likely replace Word, but it may be the go-to platform for collaborative editing. Google Spreadsheets will not likely replace a complicated Excel file, but instead maybe it works with web APIs to provide a new way for people to mashup their local data with web data.
It'll be very interesting to see how these RIA platforms develop over the next couple years and to what extent they can capture the "best of both worlds" in this space. No matter how one cuts it, it will be incredibly difficult to unseat Microsoft. In fact, it may be impossible without innovating to the point of almost coming up with new types of productivity tools.
The pendulum of the thick client and thin client continues to move back and forth. Web 2.0 has pushed things one way but RIAs may push the thinking right back the other way. Having data/files locally is not always such an evil, particularly where processing speed, efficiency and privacy are concerned. Either way, looking forward to how it all unfolds.
I'm not sure about the other tools (haven't used them yet), but I have noticed one interesting feature of Google's document writer, and that is the ability to publish directly to the web and immediately share with others (who may or may not have the ability to edit), and essentially create a basic html page available to whomever you want, without any hosting, etc, and with next to no effort. We are actually using this for a group that needs frequent updates but has no real web design person, the page links to a google document and changes are seen as soon as the document is republished. Google's massive amount of storage space makes this great. If these pages are being indexed and will be made searchable, all the better, although that does bring up some privacy issues for corporate users.
Zimbra has a document sharing/wiki feature just as rflight, above describes, along with nesting, out of beta in Zimbra 5, due later this year. That with true document sharing via Zimbra briefcase, which allows users to create directories of any kind of documents, some openable and editable without having to download to the desktop, that can be shared and delgated, is the direction Zimbra is going in the short-term.
As for office 2.0? I'm a fan of Apple's new Numbers, and its already well-developed Pages and rock-star Keynote (the PowerPoint killer). Once you can import/export from/to Office, and can also export to web, etc, or flash, or Quicktime, not sure that any other bells and whistles are needed. Of course, the information has more value when it can be searched and organized and shared, as suggested by others here. You've got Zimbra for that.
Applets are Deprecated? Yes I guess they are although Sun's efforts around JavaFX bear some watching. If JavaFX gets traction we may well see a resurgence of Java on the browser.
I'm not convinced that online office applications will take off. Two recent experiences make me think that the online office application space is overrated.
First, I don't see presenters moving to an online versio of PowerPoint. Network connectivity isn't a guarantee, and presenters respect the KISS principle. And slides are get posted for the attendees. File-based approaches solve both these issues.
Second, I am completely enamored with the new PivotTables in Excel. In Excel 2007, categories can be filtered with Contains queries, common date ranges like Todaypossible to have a PivotTable with
As you point out over the past decade, a number of companies have unsuccessfully attempted to go after Microsoft's dominance in the office productivity applications and lucrative market.
However, I believe these failed attempts have less to do with technology or Web 2.0. I thought I would share my insight from a business perspective.
Although the current approaches and technologies are more web-based ( Ajax, Flash, Flex, SaaS, etc.), one of the reason companies like Zimbra are getting traction is transparency (open) and mobility. M. Sawhney has done some excellent academic level studies about value creation in a networked world. What is fundamentally different with some of the new wave of companies is that they are making the applications more open, flexible, and highly suitable for mobile devices. The latter extends the basic concept of value creation through transparency. Just look at the recent announcements by Apple, Google, and Skype. These tier I innovators and keenly aware of creating and capturing value by extending their core applications onto more mobile and transparent (more open) devices. Meebo is another company that just made this connection.
Excellent post!
Kameran Ahari
http://gotastrategy.typepad.com
I'm not convinced that Office 2.0’s focus on online applications will take off. Two recent experiences make me think that online applications are overrated.
First, I don't see presenters moving to an online version of PowerPoint. Network connectivity isn't a guarantee, and presenters respect the KISS principle. And the typical relationship between presenters and attendees is to post slides online. File-based approaches solve both of these issues, but online approaches make them harder.
Second, I am enamored with the new PivotTables in Excel. In Excel 2007, categories can be filtered with BeginsWith/Contains filters, common date ranges can be filtered with Today/Yesterday/LastWeek/etc., numbers can be filtered by top X-percent, etc. Coupled with PivotCharts, I don't see an online competitor competing successfully against what can be done on the local machine.
Will the AJAX “revolution” be the last gasp for HTML-based sites? With SilverLight and Flash coming on strong, I suspect that Google and other companies’ server-centric approach will be regarded as their biggest blunders.
The reality is that online office apps are not ready to contender with desktop apps but i expect that to change by 2010 when cloud computing has evolved enough for that, and guess who is really into cloud computing?
Ray Ozzie.
He calls it the Windows Live Infrastructure and it will be what will power future web apps and the entire live suite that should be finished in early 2008.
Now, Microsft has always had a concept for online office, it was called live desktop a year ago and it was originally planned to arrive in 2007, but it is obvious that will not happen now.
What could have changed for Microsfot to decide that it was still no time to do it?
1.-they realized that they needed to built a new data center, and so they have
2.-Finish the Windows Live Suite first
3.-Create a indexable and shareable repository for files, something that came in the form of Live Office marketplace
4.-improve sharing and collective writing in desktop software (sharedview is not finished yet)
5.-a better technology that can translate better from desktop to web (silverlight 1.1)
6.-tools to built and develop such technology (expression suite was born for web development and interface representation but a true develop environment is missing)
7.-they realized that current server software is not suited for such tasks and they needed to wait for the version to come out and grow (sql server and windows server 2008 come out in february)
8.-that they needed something better to develop it and and to let other develop it (visual studio 2008 also comes out along with SQL and WS2008)
9.-that such tech must be integrated with the enterprise first and be proven before executing such change (sharepoint evolution, workflow, forefront, etc)
10.-that your users need to have a t1 broadband speed at minimum before even thinking of doing that (North America will not get to that point until 2008)
11.-that convergence is needed so mobile devices need to evolve too first (wm7 along with mobile silverlight tech now being tested with mobile wpf and pocket .net)
12.-marketshare to succeed with the idea of such development (see all points before this one and think it out)
anyone thinking that such drastic move just need software that works being on the wild is completely insane.
office 2.0 need to be conected and have a minimum consolidated standard on the 3 levels of use and then be able to access it everywhere(desktop/mobile)
Private, Commercial (work enviroment) and Corporate
Priivate
Good Article ... I am surprised Yahoo does not follow google in office mode alot faster or at least buyout wordpress.
I think you should look at www.nivio.com, not just because I am biased, but because it has taken ALL of MS suite of apps, word/excel as they are and placed then in a web browser. So in short you get Word 2003/2007 on XP in a browser, i.e online...isn't that what google/zoho/live etc are all trying to do.
Iqbal
(Disc: I am involved in Nivio)
We just published a comparison table for those who want a quick run-down of the features. Also available is Zimbra vs. Google Apps.
Dear Iqbal commenter #27 - streaming your desktop does not count as Office 2.0.
@ #29 - Mark
I read the last line of the first para - "and provide globally accessible office software." which is what all these apps above are really about. I dont really have the exact def of office 2.0, but if its about the first para Nivio would fit, if not, then I would agree with you.
Iqbal
Hello, my name is Gudvin, I like yours blog.