October 01, 2007

The Battle of the Business Models for Web-Based Apps

Today we get more proof that Microsoft believes it can compete with Google Docs & Spreadsheets (possibly the worst branding ever for a great offering--that name came straight out of product management into beta no doubt) by releasing Office Live Workspace, which Microsoft calls “a new web-based feature of Microsoft Office which lets people access their documents online and share their work with others.”

A web-based feature of a desktop product. Hrrrmmm.

Well, it's fascinating messaging. Calling this a feature. Read on and you'll see that Microsoft plans to charge $$ once you exceed the 1,000-document limit. And no one knows how much. Charging for a feature. Now that's smart. Not.

According to ZDNet's Mary Jo Foley, there's "...no word on how much, if anything, Microsoft plans to charge once users have more than 1,000 Word, Excel and PowerPoint files..."

Microsoft, Let me get this straight: You're going to charge me to buy your software. And if I decide I want to use it specific "feature" I pay again.

Exqueeze me, but no thanks. I already have thousands of word documents that I created using the software I paid for. I'm sure not going to pay extra money to work with them online when I can do it for free with Google. Google's live revisioning and collaboration features work great. Why would I ever want to pay to use Office online?

The problem here is that Microsoft is trying to plug a square business model into a round hole. Microsoft Sells Software. Google Sells Ads. Google can give away CAPABILITY, can ENABLE, can FACILITATE for free because it makes money off of something unrelated to its core functionality, the reason we use it. Microsoft's model is to make money off of product and support, off of the thing we actually buy.

That's why Microsoft can't can't compete with Google on web-based apps, and why Google CAN compete with Microsoft. It's about the business model. It's about smarts of Google of coupling its revenue stream with something unobtrusively unrelated to the core service it offers to customers.

Google does it better than anyone. Microsoft still needs to find a way to do it at all.


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