Ian Landsman is Starting From Scratch, June 6, 2006:
Google Spreadsheets & I Still Don’t Get It
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Maybe I'm dense but I still have exactly zero idea what the heck Google is doing. OK they're building an "operating system" for the web. They're building "Office" for the web. I just don't get why????
Google makes all it's money from search ads. Free Office products won't help it generate revenue. I also highly doubt that ads in the office products will lead to any serious revenue. Search ads work because I'm actively searching for something and an ad helps me find it quicker. Showing me an ad while I'm editing my spreadsheet isn't going to work because I'm not in the same frame of mind when editing a spreadsheet vs searching.
Second, I doubt this will have any true impact on Microsoft. GE isn't going to tell all their employees to go use Google Spreadsheet and oh yeah if you have problems ask the nonexistent Google tech support. Come on that's now how the real world works.
So even if this did hurt Microsoft I don't see how it helps Google. Any ideas?
Discussion
My impression is that part of the answer may be that Google may try "fighting" MS with their own oft-alleged weapon: FUD. 
(So everyone asks: "what are _they_ up now *now*?)
Created by Philipp Schumann on 06.06.2006 4:06 pm
Perhaps a long term perspective is the way to look at this. Google appears to be a pretty smart organization. They have a couple of billion in the bank, right? Don't tell me it costs $250million to make an ajax spreadsheet application. For an itty-bitty expense, Google is building products that a generation from now, may be the standard amongst a market segment. And it appears to be much easier to index and search information stored in your own environment than trying to invade the desktop.
Granted, this theory of mine is worthless if Google has no vision behind these efforts and all they are doing is engaging in "cool" programming projects. But I think that they are smarter than that and I think that Google's products do add value. I love Gmail and Calendar and Spreadsheet feels pretty good.
Created by Paul Lawler on 06.06.2006 4:06 pm
Perhaps. I'm not so sure I agree that they're a pretty smart organization any more. I mean think about it. Their only real money maker is the original idea that was thought up 7-8 years ago now. They really haven't created any money making products since that original one.
The big problem I always have with these "next generation" office tools is that they don't seem to have any plan in reality. First off MS only makes money on these tools by selling them to businesses. Most consumers steal their copies from the office, or a small few buy the teacher/student version for $150. So the main market to satisfy here is the business user if you want to make money.
Now the needs of the business user seem to barely be addressed. There's no support which is the first problem. Second, there's no statements really about security. Most businesses will be put off by putting any of their secure data on a Google server and Google doesn't appear to be addressing that issue very strongly. There's also no data on speed. Sure you can go build a test spreadsheet and it's fast. Big deal, that's not how real Excel guys use Excel. How does it stand up to a hundred thousand rows? Does it sort instantly? On and on.
If I was a big business I'd also be turned off by Googles inability to actually ship a product. Everything is Beta. Heck the spreadsheets aren't even beta their in the labs. It all seems very amateur if you ask me and I'm betting most corporations who are looking at this situation think the same.
Created by Ian on 06.06.2006 4:06 pm
I don't think releasing the product is necessarily part of any major overarching strategy. I don't have any great insight or really a cohesive thought about what Google's doing with their many little only slightly useful product releases. So, no major thesis to this post, just some data points to contribute to the discussion.
Other than use-specific widgets like buttons and checkboxes and such that are built into HTML, the most common components in application development seem to me to be an advanced text editing component and a grid component.
Writely bought them the text editing component, and their web development team build the grid component.
I think the spreadsheet product is in a lot of ways just a proof-of-concept for the grid component. They have a lot of web developers at Google, and those web developers all have their 20% project time, so maybe a couple started working on a web-based grid component. Like everyone else who's made one, they demonstrate it using some totalling functionality and then from that it's easy to slap in some formulas, and so maybe the original devs ended up being able to dedicate a month to it to polish it for release and a few more to help babysit the release and stuff.
I don't think it costs Google a whole of money to release Spreadsheet or Base or a lot of their other limited use products. They've got massive amounts of data and bandwidth and processing power already being used, I don't think these apps have a significant impact on their costs at all, and as has been pretty strongly argued, they're almost pure profit.
The whole point of Google Labs is to be research and development, right? Maybe there's no direct money in the product aside from good-looking stock activity, but that doesn't matter so much because Google ends up having the things that their staff is experimenting with.
I have signed up, but haven't been processed/sent an invite yet, so I don't really know too much about the tool, but I'm looking forward to being able to have a couple spreadsheets accessible from my desktop and my laptop and my day job.
Created by Rob Drimmie on 06.06.2006 4:06 pm
Let's wait and see what google does, don't come to conclusions now 
. What google is trying capture a international market like Orkut (a myspace like service from google) is very popular in south america and asia. It's a cycle Micrsoft went through this for excel when Lotus 123 was popular, when excel become popular in Europe ,they re released Excel in US, made them a market leader. I think google is doing the same thing.
Created by prakash on 06.06.2006 4:06 pm
Hmm, I don't think so Prakash. I don't see how it has anything to do with international or not. US companies aren't going to buy something where there's no training, no support, no assurances on data security and business users aren't going to look at ads and/or click on ads while working on their spreadsheets. Also, MS has had lots of successes. Google has had 1. I'm not sure why we give them so much credit.
Created by Ian on 06.06.2006 4:06 pm
This might be a little bit of a wild thought, but what about application appliances...
A couple of years ago, Google released their Search Appliance (http://www.google.com/enterprise/gsa/). How long it will be until their entire online Office suite is finished and they start packaging that up on a server appliance?
From a business perspective (not Google's), you can now ditch Office and install an appliance that doesn't require pushing apps out to individual desktops, troubleshooting, individual licensing, etc.
A nice simple boxed solution that's based on volume/per server licensing that can easily be scaled out to handle additional users/load.
Created by Mark Lubischer on 06.06.2006 4:06 pm
I do like that idea Mark and I think it makes a lot of sense. The big downside though is that the search appliance really hasn't made Google much money. Would an Office box? Maybe. Nobody has ever tried anything like that before that I can think of. They'd still have to get a lot more involved in training and support than they appear to be doing, but it is Interesting....
Created by Ian on 06.06.2006 4:06 pm
Joyent(.com) used to offer an appliance box for a web-based email/calendering/file share suite. From a brief look at their site it looks like they've moved more towards pure hosting (which makes sense, given the textdrive merger) but there's still hints of the existance of the appliance.
I don't know how well the appliance has done in comparison to their hosted plans.
Created by Rob Drimmie on 06.06.2006 4:06 pm
Yeah I thought of Joyent as well when Mark posted that.
On an unrelated side note, Joyent is a HelpSpot customer. Bing!
Created by Ian on 06.06.2006 4:06 pm
There is a possibility that despite accusations of a lack of focus and/or wild speculation, Google are actually focussing on their 'search' core. Currently the content that we create in Microsoft/Star/Open/Ability Office sits on our HDD and yep sure if we have GoogleDesktop then we can search it - but here's the rub - only when we are sitting at that machine?
At the moment, Corporate customers with $$ to spend can purchase a Google search appliance to solve their integrated search problems but there are still challenges around permissions, access rights and all of that stuff that will become increasingly complicated within the world of federated systems, web services and offsite hosted content.
If we assume that the chaps and chapesses(?) at Google are in fact really smart (we might be doing this correctly, or they may actually simply be caught up in Web 2.0 hype) then we might consider that: as Google has proved with eMail, the more that we move our content online with them, and onto their servers, their objective of relevant search results (for which read relevant adverts) becomes easier. Search is online all of the time, accessible from where we are (e.g. inside our email client) and so we use it more. The more we use the 'search', the more adverts that they can deliver to us and the closer our search start point is to our mental trigger (i.e. why we are searching), the easier it is for the results to become more 'contextually' sensitive.
If I have been looking at a spreadsheet with my stock portfolio in it and then I search for 'Microsoft' then adverts for brokers selling or trading in microsoft stock or analysts reports on MSFT are more likely to get my click-through than retailers selling me copies of Mappoint or Office from PC World or PC Warehouse? Similarly, if I have been reading an email from a friend containin the word dog, the word bone then I am probably more sensitive to pet food adverts etc if I search for the word 'fido' than i would be if I was actually looking for information on a long defunct email system from the old days.
If this is the case, then Google have everything to fear from Microsoft's (as yet weak) increasingly web based office offerings and more to fear from other hosted (Web 2.0) providers who could continue to agregate more and more content that delivers valuable context to them on servers outside of Google's search engine reach.
So perhaps there is a strategy in their madness, perhaps they are still 'really smart'. The worrying thing for me if I was the CTO at Google would be that logically there is no end point to the strategy, it logically develops into 'We want to host, index and provide the preferred user interface to all of the data that you access on a regular/daily basis'. In this thesis, in order to succeed, Google must always have the killer app in every mainstream category . . . . not only will we see office and productivity components and perhaps development tools (oh we're seeing those already aren't we!), but what about personal financial management, mapping, CRM (there's a killer for search and result correlation).
Now where have I heard that before: Microsoft gathered developers to it's platform and then was able to acquire or imitate the best (MS Mail, MS Office, MS Money, MapPoint... ) to grow it's own revenues. Google are already publishing development libraries, so perhaps i'm not far off in my supposition. By definitiion, the leader in any era of computing will seek to own and control the user experience and the information. Holding the data (which also equates to data formats) creates a barrier to coversion/churn, while owning the user experience creates a training and adoption barrier to change. We only have to look at the relatively slow adoption of OpenOffice which is functionally very close to MS Office and several hundred dollars a seat cheaper to understand the benefit of these two factors to the incumbent.
I recently noticed with interest as Amazon published an object based storage API that allows developers to pay to use their data centre / storage system. Individual users are already using Gmail with various add-ins as a storage mechanism for their files. Given the possible strategy outlined above and Google's well known in-house modified file-systems, grid computing expertise and global data-centre presence etc it wouldn't be a stretch to imagine them soon offering many web 2.0 companies / developers 'gStore' a google online file-store. Perhaps it will only permit the storage of XML ? Perhaps the DTD's or schema's will have to be registered as you subscribe? Perhaps Google, without any 'evilness' will reserve the right to apply those DRDs/Schemas 'solely for the purpose of providing customers/users with access to their own information and customising their search results'. Perhaps you will 'be able to offer your clients the power of integrated Google search. . . as they search (using Google) . . . relevant results from your Web 2.0 application will be presented alongside their own gMail, Google Calendar, Google Spreadsheet etc etc results.
Come to think of it the Google 'account' architecture is already fairly federated, it wouldn't be a suprise to me if that became accessible to developers as well. After all (and I am sure without being 'evil'), the next best thing to knowing what a user was looking at just before they searched is knowing where they have been, and roughly what they have been doing. . . .
As many people have pointed out, the killer here in terms of corporate adoption will be support, but with '0000s of people performing comprehensive beta testing and software updates and patches being 'deployable within hours' to a hosted solution, I would venture that Google services when they leave 'mass Beta' and enter 'General Release' will continue to be more reliable and available than much corporate software is today.
Created by Mark Gillett on 06.06.2006 4:06 pm
Nice post Mark.
I'm not sure how much contextual data there is in spreadsheets. An email is far easier to understand that most spreadsheets. I would say stocks are the exception to the rule. For instance if I have a spreadsheet of unit built by location and the locations include Buffalo NY, it's unlikely ads for Buffalo are relevant to me. I continue to have doubts about any ads being relevant to me while I'm working on a spreadsheet.
I concede it will be a fine tool for grocery lists, home budgets, etc. Maybe that's enough, but it's always framed as an anti-microsoft play and I still can't get there from a revenue perspective.
Also the level of intrusion you describe (looking into my spreadsheet) is likely to make just about every business uncomfortable.
Created by Ian on 06.06.2006 4:06 pm
The kind of short term thinking that brings in ~$25 million cash in one week for Eric Schmidt is the kind of short term think i'd like! http://finance.yahoo.com/q/it?s=GOOG And the Senior Vice President aquires 150,000 shares at $0 a share? That one transaction alone cost Google $52 mil.
They have almost 6,000 employees now, wtf are they all working on? They've built offices in every major city of the world now too. And we hear almost nothing from the inside, unlike Microsoft where if you browse the MSDN blogs or go to various tech conventions, you can hear and see what everyone is up to. Skynet?
Created by Phil on 06.06.2006 4:06 pm
Oh, BTW, my own solution to the 'my files and apps are always available online' problem is called 'Notebook+OpenVPN'
Created by Serge Wautier on 06.06.2006 4:06 pm
Pumping the stock ? Now, that would be sooooo short term vision. If it doesn't generate revenue (either directly or indirectly), it will eventually do more bad than good to the stock.
Created by Serge Wautier on 06.06.2006 4:06 pm
One argument I've seen in favor of that is that Google wants to control where the user "lives". So the idea may not necessarily be the ads while using say google spreadsheets but that a user would be more likely to use google search while using google spreadsheets since search will be right there. Google is paying a lot of money for "real estate", for the opportunity to be in front of the user, to Mozilla, Dell, etc. This move can be seen an extension of this strategy. For Google, Microsoft poses a strategic threat to its search business since MS can use its massive hold on users with Windows and Office to provide search. The thinking is that the mainstream user goes for the convenience and if MS makes search embedded/integrated to OS and Office as they plan to, users may not take the additional step to go to google for search, hence Google needs to battle MS to be the primary place where users live. Several Google initiatives, such as Google Desktop, sidebar, etc. is explained with this rationale. Besides the cost of providing Google Spreadsheet, a simple web based application not an "Excel killer" is not significant for Google. They don't have much to loose.
Created by Berkay on 06.06.2006 4:06 pm
I think it neither hurts Microsoft nor helps Google. I think Google is just playing up to all the "They wanna kill Microsoft" hype to generate cheap publicity. Afterall Google doesn't advertise anywhere, so how do they continually get attention? Like this. I don't know how much they bought the company that made this for, but i'm betting it was pretty cheap (maybe a mil in stock plus a job offer?). That would be cheaper then running an ad in PCMag, slashdot, + the million other sites talking about this today. And plain ads wouldn't generate this word of mouth.
The conspiracy theorist in me also thinks they do it to pump their stock up... if you look at the insider trading the two founders have cashed out well over a billion in cash each. Yes, it makes sense to diversify, but over a billion? Each? And then they just issue themselves more stock at $0. Repeat.
Created by Phil on 06.06.2006 4:06 pm
I think pumping the stock makes most sense to me. Now that they have shareholders they need to show they're doing something with all the money. The problem is that the search biz is essentially stable at this point and there's not a lot of new technology there which is going to increase revenues, at least in the short term. So then the real question is how long until the shareholders realize this is all bull and start rethinking their valuations.
I've actually been thinking about his for a while. Normally it takes years for a business to move into "cash cow" phase of the business cycle, but perhaps Google is moving at super speed through the entire process. Even the downside. The next step after "cash cow" is pretty much slow decline.
Created by Ian on 06.06.2006 4:06 pm
I also wonder if Google does itself a disservice by keeping this competition with MS going. They're in the search business, MS is in the OS business. I think they'd be smart to make those distinctions and try and keep themselves separate from MS. MS is still a monster and still has the business users which are the most profitable to have and gives them lots of leverage. MS's customers have long cycles. When they buy Windows they're sticking with Windows for yeaaars. Googles customers on the other hand are fickle. A new service could come out tomorrow and the searchers would go there. To me it's a much less powerful position.
Created by Ian on 06.06.2006 4:06 pm
Ian, I don't get most of this 'Web 2.0 online office' stuff. I just went to a tech meetup and saw, among other things 1) A framework for PHP that makes draggable windows in your browser using only 42 lines of object oriented code 2) A website that makes sticky post it notes in your browser 3) Something that lets you post documents to the web and share them with people... what's the point of all this? Why aren't these people working on hard problems, that can actually bring in revenue somehow, without relying on Google ads or being bought. Where is the real creativity, with everyone working on either Web 2.0 office sites, or if not that, social networking?
Created by Lee Semel on 06.06.2006 4:06 pm
Yeah I agree. I'm cool with people working on small libraries, but why everyone is building the same library puzzles me. They're basically just trying to one up each other. Don't even get me started on social networking....
Created by Ian on 06.06.2006 4:06 pm
I don't think they are supposed to be taken too seriously (more like playing with tech tricks that can later be employed more "usefully" / "seriously" in "real-world" apps, such as indeed AJAX or RSS), so let's not take it too seriously...
"Why aren’t these people working on hard problems, that can actually bring in revenue somehow, without relying on Google ads or being bought?"
These hard-problem people exist, too, lots of them, they just don't have the time or need to create this kind of hype community (which says a lot about the 2.0 crowd). It's all kind of self-referential, the community is about the community. Web 2.0 fans and web 2.0 creators are basically more or less the same group of people, or so it seems to me. Probably more a web-pop-culture scene than a pure-computer-science-or-information-technology scene which works separately and had their boom and hype 20 years ago...
Created by Philipp Schumann on 06.06.2006 4:06 pm
All these google applications are trying to achieve one goal of bringing more and more users to their search site.
They will not make any serious dent in corporate market for MS Office but few individuals might start using it.
They are trying hard to protect the golden hen with these applications.
Created by Raza on 06.06.2006 4:06 pm
Their stock went up about $15 today. That's what it's all about. Every time they launch something like this they make a killing, so they will keep releasing, releasing, releasing. It's pretty simple.
Created by Ben Mc on 06.06.2006 4:06 pm
I imagine that you will be able to create a set number of spreadsheets with a set functionality and a limited number of people to share, and that there will be a paid for "professional" version with no limits.
Created by James on 06.06.2006 4:06 pm
I think that they are running out of ideas. They do not know exactly what to do with all the cash they are sitting on. For this reason they are doing expensive experiments to find out a viable direction.
More, they must show a certain amount of hype to shareholders to give the imagine of an active company.
They are striving to create something totally new on the Internet but the Internet, now, is in its maturity and there's no room left for weird experiments.
IMHO, now, they must decide if they want to be MS busters or a good Internet company. If they decide for the first, they should stop experimenting and start throwing out some good enterprise applications in Salesforce.com style.
Created by Sevenoaks on 06.06.2006 4:06 pm
"Why do insiders continue to drop all those billions if the sky’s the limit? Diversification? Ha! Go ahead, pull the other one.
Take a hard look at this problem, and a hard look at those insider sales, and then ask yourself why on Earth Google is spending time on doodads that no one needs, like an online spreadsheet. I think the answer is because it needs news that looks like the future."
http://www.fool.com/news/commentary/2006/commentary06060927.htm
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Created by Ian on 06.06.2006 4:06 pm