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Monday, August 28, 2006

Google's Tepid Move Into Business Software

Stocks: (GOOG)(MSFT)

Google is challenging Microsoft in the business software arena. At least that is how the headlines read. But, it is a limp beginning.

Google will bundle its Gmail program, its scheduling software, and instant messenging applications so that they can be used by small businesses and non-profits. Universities will also be targeted. The strongest part of the offering is probably that Google will host the software on its own servers which means that small companies will not have to keep the software on their PCs. Google maintains that this PC hosting function is expensive for smaller firms.

Google will also offer a premium version of the service that will be free of advertising and will have the administrative functions that larger enterprises want.

The move is viewed as a challenge to the Microsoft OS and server platforms which will be upgraded next year under the name Vista.

The Google offering does not have spreadsheet or Word-like features to create written documents. Although the hosting aspect of the software my be attractive to businesses, the lack of important features like work processing make it a partial solution at best. It is difficult to imagine that many companies will make the change. It may be used as a supplement to Vista, but it is hardly a direct competitor.

Microsost has no need to worry, unless Google adds the other critical features that make the bundles applications complete.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about

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