GOOGLE APPS AND THE POWER OF EMBEDDED FUNCTIONALITY
There been a lot of talk today about Google releasing a suite of hosted applications, starting with basic communications (email, talk) running on your own domain and then more Office-like apps such as word processing and spreadsheets.
Context & Ripple Effects
This lands one day after Google disclosed plans for a long-awaited office suite with first components due this week, explicitly framed around collaboration options that Microsoft Office lacks — wait, that framing came from the August 28 disclosures themselves: real-time co-editing as the wedge against Redmond's installed base.
The launch pattern is consistent with how Google embeds function into surfaces people already use — days earlier it added in-Gmail MP3 playback so attachments play without leaving the inbox. A rumored bundled Personalized Start Page (iGoogle) remains unconfirmed, but would extend the same logic to a workplace landing screen. And with entrepreneurs already treating Google rankings as make-or-break for visibility, shipping applications inside Google's own properties compounds a distribution advantage rivals must buy traffic to match.
First-order effects
- Organizations can now run email and Google Talk on their own domains without operating the underlying mail infrastructure, with word processing and spreadsheets due as the next components of the suite.
- Microsoft immediately faces a free, browser-delivered productivity competitor whose stated differentiator — live collaboration — targets the weakest point in its licensed desktop model.
Second-order effects
- If the unconfirmed iGoogle start page ships with the service, Google gains a daily-login surface inside workplaces, converting search-era attention dominance into application defaults that competitors must dislodge user habit to beat.
- Paid small-business email hosting and IT resellers see a zero-license bundle of communications plus productivity compress the price floor for exactly the customers they serve.
Third-order effects
- If the pattern holds, productivity software shifts from per-seat licenses toward advertising- and data-funded hosted services, weakening file formats and desktop install bases as the source of vendor lock-in.
- Distribution consolidates around whoever owns the entry points users already open daily — the same dynamic that made Google's search results capable of making or breaking companies — raising the prospect of platform gatekeeping questions as applications follow search into the browser.
The trend: Productivity software is migrating from licensed desktop installs to browser-hosted services distributed through the search and mail properties users already open every day.