Googling Microsoft

Google isn't sayingyetthat it's going to add the Writely word processor and Google spreadsheet to its upcoming business productivity bundle. But it doesn't take a genius to know that's what they'll do.

One can imagine the reaction in Redmond's executive suite:

Steve Ballmer: "They're giving away spreadsheets!!! Holy @#*&!."

Bill Gates: "Yeah. That's what WE used to do."

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Well not really, but those with very long memories know that Microsoft won its dominance in desktop applications with aggressiveand smartpricing.

Microsoft Office at its inception was little more than three applications (Word, Excel, PowerPoint) thrown in a box and sold together.

It seemed that Microsoft cut the price of three apps (later four and more). What it really did was wring out more revenue per-customer who perceived a bargain.

Very few Word customers would have bought the other two apps at $495 or more per pop back in the day. The beauty of the bundle was many of these same customers did cough up significantly more money for three applications, two of which they might never use.

It was that packaging coupalong with later-added integrationthat drop kicked Lotus 1-2-3, WordPerfect and Harvard Graphics to the curb.

Perhaps a more apt analogy to the Googling of Microsoft would be Philippe Kahn's old Borland. Kahn freaked his software rivals by carpet bombing the world with cut-rate but fully-functioned compilers, spreadsheets and databases.

Microsoft types pooh pooh the Google threat, countering that Writely et al. are underpowered and feature constrained compared to Word and Excel. What they don't seem to get is that most people blast Office apps for for being "over featured" and overly complex. Complaints Microsoft says Office 2007 will address with its new ribbon interface.

But some at Microsoft see a very real threat. One insider said he'd be willing to bet that the Google offerings will come up for discussion when CIOs talk volume license renewals with Microsoft.

Can you say: "Leverage?"