Google Finally Goofs Up

Go ahead, type your hate mail. I can take it. Just remember that when you read that I think Google (Nasdaq: GOOG  ) may be the most brilliant of all the copycats out there. But teaming with Sun Microsystems (Nasdaq: SUNW  ) to push StarOffice? Why, Google? Why?

You don't really see StarOffice as the white-knight alternative to Microsoft's (Nasdaq: MSFT  ) Office, do you? Not that StarOffice is bad. Heck, its open-source cousin, OpenOffice, is being adopted by the state of Massachusetts. Moreover, a review of the latest StarOffice 8 suite in trade journal InfoWorld touts increased compatibility with Microsoft's productivity software and open formats that make use of XML, a popular standard for document-sharing on the Web. (If you filed anything today with the Securities and Exchange Commission's (SEC) EDGAR database of financial filings, you used XML.)

So, yeah, StarOffice is solid technically. But this is still an incredibly lame business move.

Again, the problem isn't with the software. It's with Microsoft's utter dominance of the market. Numerous published reports suggest that there are anywhere between 400 and 600 million global users of Microsoft Office. Last year, Sun told U.K. trade journal Computer Weekly that there were 40 million Star Office users worldwide. Really? OK, but I wonder if this is only counting downloads; last week InfoWorld reported that there were 53 million downloads of StarOffice and OpenOffice. Either way, it appears Microsoft has at least 10 times Sun's number of customers in productivity software.

So why, Google, are you jumping on this bandwagon? Why not just bang your head against a brick wall instead? Sure, it'd hurt, but it would probably cost less. In the late '90s, there were dozens of other collaborations like this because, well, Mr. Softy was the enemy. It was ill-conceived then and it's ill-conceived now.

Put differently: Google, you have a remarkable advantage over Microsoft. You're focused. More than 90% of your revenue comes from search. Sure, Microsoft's revenue still comes mostly from Windows and Office, but it has established significant beachheads in search and portals with MSN, and in gaming with the Xbox. Both require big investments to maintain.

You, on the other hand, can invest only in what makes searching the Web better, smarter, and faster. Because anything that doesn't advance that cause -- creating a better advertising platform -- is irrelevant. Sure, your toolbar will land in downloads of StarOffice (which might drive ad revenue), but I don't think any resource allocation, financial or otherwise, will exceed the sort of return on investment you'd achieve elsewhere. It's taking your eye off the ball.

Strike one.

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Fool contributor Tim Beyers thinks Google is reminiscent of Sun in 1997, but with better margins. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has an ironclad disclosure policy.


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