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In the same week that Google got into bed with Capgemini to help it break into the business application market, MSN criticized Google’s ability to produce such programs up to the standards that consumers are used to seeing from companies like (oh, I don’t know) Microsoft, for example. CNET News covers the blow-by-blow in wonderful detail, however, I did want to highlight one quotation in particular from a Microsoft rep in an address from Monday:

“We believe competition is good for customers and the industry. That said, customers tell us that our solutions deliver the ease of use, reliability and security that enterprises need.”

Let’s pause here. Okay, have you stopped laughing yet?

You don’t have to be Steve Jobs to know that the one thing that Microsoft cannot tolerate is competition. Well, let me rephrase that: Microsoft loves competition, just not competition that it cannot trample, buy out or render obsolete through immense investment in R&D. Okay, let’s proceed with more of the quotation:

“[Google’s] enterprise focus and now apps exist on the very fringe, and in combination with other fringe services only account for 1 percent of the company’s revenue. What happens if Google executes poorly? Do they shut (them) down given it will (affect) them in a minimal and short-term way? Should customers trust that this won’t happen?”

Touché, Microsoft. This is truly a sound criticism and, to be sure, no company knows more about a service suffering as a result of low priority than Microsoft. Working in the sphere of search engine marketing, we deal with Google AdWords, Yahoo Search Marketing and MSN adCenter on a daily basis. Microsoft projections for Q3 indicate that the entire medium of Online Services will generate less than 5% of the gross revenue for the quarter; MSN adCenter is one of the several components of Microsoft’s Online Services division. Perhaps this is why MSN adCenter lags in every conceivable area behind Google AdWords and Yahoo Search Marketing when it comes to its interface, its customer support and its ability to deliver an efficient advertising experience to its clients. Clearly, Microsoft–the great juggernaut–doesn’t lack the intelligence or the resources to make adCenter into a reasonably usable product. Perhaps they just don’t see search as a priority; perhaps Microsoft doesn’t care.

The criticism of Google’s corporate application services (known as Google Apps Premier Edition or “GAPE“) have already been deflected by Google’s reps, one of which described it as “at best, cheeky.” Microsoft, which used to have such a knack for outworking, outwitting and generally outdoing its competition for so long, is finally running into some of that “competition” it believes in so strongly. Explorer loses ground to Firefox every quarter; Apple is as hot as it’s ever been; the Motorola Q and Microsoft Zune were viewed as underwhelming at best; MSNBC continues to be super-boring and to suffer bad ratings.

For centuries, the Romans suffered attacks from barbarians at the outskirts of the empire, winning a few battles here, losing a few there, never feeling truly threatened in the capital. But now, for the first time, a real threat to the heart of Rome seems imminent. Google, a considerably smart, efficient and hungry competitor is bringing the battle to Microsoft’s doorstep: desktop applications. Now, I’m not saying that GAPE will replace Office or that the two can’t possibly coexist, however, I will say that it will certainly be interesting to see if Google can succeed in this arena the same way it has in every other arena in the world (and out of the world!).

So far, Microsoft has responded with weak speculations that Google’s apps might not prove reliable at some nebulous future date. If (but more likely, when) GAPE proves a viable alternative to the antiquated Office applications, though, what will Microsoft have to say?

More importantly, what will Microsoft have to do?


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