What google have in economic terms done is to create a large segment in the advertising market, a bit like free TV with adverts. They can keep adding new toys to generate the advertising revenue, but it's not the same thing as selling software.
As far as selling apps are concerned, this offering is weak. They have higher costs than Microsoft because it's a hosted service. Hosting is a low return capital intensive business, not a money spinner. It only works if you are hosting something new and different. There is not a lot new about cut-down Office-type applications. Sure there's a market, but it's for people who don't really want to pay.
I'm not sure the hosting part of the offering really works. What could be really interesting is an appliance with these apps and a bit of storage. You could get an appliance like that for a few hundred dollars and provide the service to 20, 50 people with no Windows Server or Exchange Server CALS; and not even a Windows desktop. Now that would be interesting.
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What google have in economic terms done is to create a large segment in the advertising market, a bit like free TV with adverts. They can keep adding new toys to generate the advertising revenue, but it's not the same thing as selling software. As far as selling apps are concerned, this offering is weak. They have higher costs than Microsoft because it's a hosted service. Hosting is a low return capital intensive business, not a money spinner. It only works if you are hosting something new and different. There is not a lot new about cut-down Office-type applications. Sure there's a market, but it's for people who don't really want to pay. I'm not sure the hosting part of the offering really works. What could be really interesting is an appliance with these apps and a bit of storage. You could get an appliance like that for a few hundred dollars and provide the service to 20, 50 people with no Windows Server or Exchange Server CALS; and not even a Windows desktop. Now that would be interesting.