It's the browser, stupid.
That's Google's (Nasdaq: GOOG ) vision: The company wants you to move as much of your computing activities as possible into your Web browser -- using Google services, of course.
Now, with Google's latest acquisition -- Writely -- Google users will have access to browser-based word processing.
On the face of it, this looks like a blatant attempt to attack Microsoft's (Nasdaq: MSFT ) Office franchise. To support its huge market cap, Google needs to grab large markets -- and MS Office, with its 300 million worldwide users, certainly fits the bill. Given how often people generall use word processors, Google can monetize its new service through advertising, or perhaps even charge a monthly subscription.
While Google has a huge amount of traffic, it lags far behind competitors such as Yahoo! (Nasdaq: YHOO ) in terms of registered users. But a word-processing service would help Google get more registration, allowing the company to provide better opportunities for targeted advertising, as well as upselling premium services.
Writely is a small company, with only four employees. On Writely.com, the company says: "The response to Writely has been truly phenomenal -- from bloggers, teachers, students and businesses around the world. Lots of people see lots of potential in Writely ... and many think it's super cool even now in its early beta stage." The site debuted in beta form in August 2005.
I have tried Writely. The interface is clean, but I still like Word much better -- perhaps because, like millions of other people, I've used Word for years. Besides, Word works seamlessly with PowerPoint and Excel. Then again, Writely has been clear about its vision: to provide only those features that the average user wants, rather than the complete feature set of MS Word.
Writely has the ability to manage and share Web-based documents with groups of users, but other sites like Foldera.com offer similar features. Google's current slate of online offerings includes some collaborative features, and with its brain trust of smart engineers and Ph.D.s, it could certainly build on these capabilities. But in Writely's case, it looks like Google was smarter to save itself the time and buy, not build.
The Writely acquisition points to Google's interest in offering Office-type functionality. But again, it does not necessarily mean that Google wants an Office killer. Businesses would need a compelling reason to switch to a Google solution, since they have spent years investing and training on Office products.
Instead, the Writely acquisition looks to be an incremental incursion into Office -- a cheaper, limited-edition version catering to casual users. With Google's avid users, massive traffic, and sophisticated advertising infrastructure, an online word processor will give the search giant yet another revenue stream.
Fool contributor Tom Taulli does not own shares mentioned in this article.