Businessweek recently wrote about Google ‘charging a few dollars’ for its ‘Apps for domains’ which would include the entire suite of programs from their Writely Acquisition to their homegrown calendar, gmail and notebook….Since they are chasing SOHOs, Educational Institutes and Public/Private Corporations it takes the Microsoft Office Live Suite which is priced at USD 39.99/month.
Seemingly unrelated, when Toyota launched in India, they launched with an outdated model called the Qualis. Some people argued that lanching with a ‘Multi Utility Vehicle’ was a strategic move primarily to ensure dealerships opened in B Tier towns,district capitals etc. While it was undoutedly a key factor, i learnt later that this was done for a slightly different reason. Reason being…to choke sales of their biggest potential local competitors…Tata (whose Sumo was their most profitable product) & Mahindra (India’s biggest MUV (people mover) manufacturer. Choking sales of the best sellling product would ensure that these manufacturers would have substantially less money for R&D of future launches, and so the beginning of the end of the competitor … classical Art of War stuff that Google is aiming to do to Microsoft.
Web companies are a product of the paradigm shift of computer to network & subscription to advertising…and thats just where MSFT is struggling. Billiions of dollars of R&D, need to be earned back… MSFT either passes the subscription cost to the consumer or advertising ROI to the advertiser. Google is offering lower subscription (the growth-lever is consumer adoption) and already offers good value to advertisers.
We live in interesting times…robust sales of Tata’s low cost Indica & Mahindra’s higher cost Scorpio kept them out of trouble… i wish i knew the answer to the trillion dollar microsoft question!