The media is rife with Google versus Microsoft speculations, especially in the context of the Google-Sun announcement.
At the end of the day, the core Microsoft Office is a deeply entrenched product that has serious exit barriers. All Microsoft needs to do is reprice for the poorer geographies, and preserve its franchise. Sun’s Office suite taking its place is an absurd thought!
My assessment, however, is that Google’s opportunity to hit Microsoft (and other large players) where it hurts is much more in inherently subscription-based product or service areas like Security, Anti-Virus, Anti-Spam, Anti-Spyware, Online Back-ups, etc. which could be rolled out to their widely and easily accessible user base, and immediately monetizable.
Now, that would hurt Microsoft ($40 Billion Sales; $273 Billion Market Cap), but it would destroy Symantec ($2.6 Billion Sales; $27 Billion Market Cap), and McAfee ($1 Billion Sales; $5 Billion Market Cap).
What would it do to Google ($5 Billion Sales; $87 Billion Market Cap), if a fast growing but diversified, and also highly profitable revenue stream were introduced, and it were not Office (which would generate only hype, not high velocity $$$)?
Microsoft trades at 7 X Sales, Google at 17 X.
Entry into Security, I submit, will be the fastest way for Google to overtake Microsoft’s Market Cap, because besides enhancing its own, it will also deliver a blow to Microsoft’s futures.