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Google's Losing to Microsoft

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To: Eric Schmidt, CEO, Google (Nasdaq: GOOG  )

Dear Eric,

You blew it. Well, OK, not you personally. I'm talking about your Apps team.

Last week, I experimented with upgrading to Google Apps. My test ended within three hours, and as of this writing, I'm back to using Google's free services alongside my copy of Microsoft's (Nasdaq: MSFT  ) Office suite.

I know you're not this stupid
Google has extremely limited tools for handling data migration, and zero -- that's right, none, nada, null -- for migrating my data as I've customized it. Sure, I can move my contacts to Apps, but not the groups I've created. I can move messages, but not the labels I use to organize workflow in Gmail. I even asked for help from support, Eric, but I received none. (At least I got an apology, though.)

Effectively, you're asking me to move data, and then start over with the sorting process. No thanks. I'd rather you stole some beer from the fridge or kicked my imaginary cat.

Seriously, why make it difficult for a customer like me, one already predisposed to your services, to upgrade to a premium account? I know it's just $50 for the year, and I'm just one Fool, but $50 buys almost two months' worth of gooey goodies from the Taco Bell dollar menu. Dude!

Good stories gone bad
Kidding aside, your marketing makes this problem all the more frustrating. On Twitter and in press releases, all we hear are stories of large departments migrating from Office to Apps, saving bundles in the process.

The entire city of Los Angeles plans to migrate 17,000 employees to Google Apps. And big companies such as Motorola are talking up the suite as if the attendant savings will drive earnings. Mr. Softy can't like hearing that. But does Microsoft have much to fear, really, when you can't take care of your own installed base?

Installed. Base. These, sir, are two most important words in tech, and the bedrock upon which all great tech investments are built. Consider:

  • Apple (Nasdaq: AAPL  ) , which has more than 50 million iPhone users with access to 185,000 apps. These iAddicts are now lining up to buy the iPad.
  • Adobe (Nasdaq: ADBE  ) , whose Photoshop is one of the greatest cash cows in the history of the software industry. The company sells both entry-level and professional-level tools, expressly for the purpose of earning more from customers over time.
  • Research In Motion (Nasdaq: RIMM  ) , which makes its living convincing longtime CrackBerry users to upgrade their devices. That's been a winning strategy for years.
  • Intel (Nasdaq: INTC  ) , which might have the greatest installed base in the history of the world. All it does it sell new breeds of x86 chips to longtime customers Dell and Hewlett-Packard, among others.
  • (NYSE: CRM  ) , which has created what is arguably the most successful cloud-computing platform on the market today. The more existing customers use it, the more money makes.

Can you see the irony here? I can. Users are leaving Office behind, not only because Google offers a cheap alternative, but also because Microsoft hasn't done enough to ... drumroll, please ... satisfy its installed base.

Outlook, Word, Excel -- as popular as these programs are, they're well behind their Google Apps counterparts in enabling collaborative work. SharePoint isn't as seamless as the cloud. It never will be.

But again, you know all this. That's why your marketing is so focused on convincing large enterprises to make the switch, even as you ignore those of us who've already switched and now want to eat at the Big Kids Table. You do love us, too, don't you?

Say yes, Eric. Because here's the bottom line: No matter how many Microsoft users you get to switch, there are 100 million of us out there using Gmail right now. I bet quite of a few of us would upgrade if we could be sure that the process were seamless. Since it's not, you're leaving millions on the table. I'm here to lovingly tell you that, as a customer and investor in your stock, that's unacceptable.

Foolish best,


Have you upgraded to Google Apps? Tell us about your experience in the comments box below.

Apple and Adobe are Motley Fool Stock Advisor selections. Google and are Motley Fool Rule Breakers recommendations. Intel and Microsoft are Motley Fool Inside Value picks. Motley Fool Options has created a covered strangle position on Intel and recommends subscribers buy Intel calls. The service also recommends a diagonal call position on Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple and a stock position in Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy loves you jus the way you are.

Read/Post Comments (8) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 28, 2010, at 5:41 PM, PositiveMojo wrote:

    There is a principle that was taught by Dr. Peter Drucker regarding innovation - specifically a process improvement - which is what you are talking about. The principle is that "If a SOLUTION VIOLATES the VALUES of the INTENDED USER they are LIKELY TO FAIL."

    In this case Google has failed to account for what people are currently FAMILIAR and COMFORTABLE with. Their solution simply doesn't fit with the existing needs and values and their customers.

    Perhaps the most troubling thing about this is that Google is developing a track record of failures in this regard - consider the recent GoogleTV failure and their lack of understanding the culture and value of the Chinese. These are very serious strategic mis-steps and tend to open the door to those who have a better understanding of customer values and how new innovation relates to it.

  • Report this Comment On May 29, 2010, at 7:59 AM, Beighson wrote:

    (not trying to start a flame war but...)

    Am I the only one on TMF that's used the New Office Web Apps & Office 2010?

    The (free) Office web apps from MS destroy the google offering and when you combine it with the traditional office suite it's not even the same game anymore.

    The free consumer Web Apps are going to live at

    You can use them right now, just go to sky drive and upload an office doc and it will invite you to enable the web apps. If you think the g00g apps are a game changer, strap in for a nice ride when ya see the Office Apps.

  • Report this Comment On May 29, 2010, at 10:58 AM, gman5556 wrote:

    Google Apps was never intended to be the flagship of the company or come even close to that. Google is just trying to make software development a more competitive industry. I believe its fair to say they have accomplished that. Microsoft has had to slash prices on the corporate accounts and will most definitely see a huge decline in sales for home/personal use of Office.

    With using less than 2% of its revenue, Google has knocked Microsoft back to Earth by attacking the source of over 50% of operating margins. Like I said, Google Apps will never be a significant chuck of the bottom line. However, in directly attacking Microsoft with such little effort, how much money will Microsoft have left to upgrade systems to compete with Ad revenue??????? Thats the real benefit of Google Apps, and that is why I would chalk one up for Google against Microsoft.

    Also, if you believe Google Apps has limitations like these, post them on the Google Blogs! or send them to the company through one of their many consumer response mediums. These are legitimate claims and Google takes those comments very seriously and enough people agree they will make the change.

  • Report this Comment On May 29, 2010, at 11:01 AM, gman5556 wrote:

    Or if you are really clever change it yourself, Google releases the programming code for these things. This is why open source software development is important. Issues like these can be addressed very quickly.

  • Report this Comment On May 29, 2010, at 1:42 PM, masterN17 wrote:

    Google hasn't figured out how to support its users. This problem is evident not just in Apps but in Android and even Gmail. They are unable to get to every comment and state that "millions of comments come in per day", as if trying to use the deluge of problems as an excuse for poor response time. Unfortunately for them larger companies with bigger problems and more users are able to at least respond to them. User support is Google's biggest problem.

  • Report this Comment On May 29, 2010, at 6:57 PM, plange01 wrote:

    google is a failing company reduced to making cheap copys of everone elses ideas...

  • Report this Comment On May 31, 2010, at 3:50 PM, mhonarvar wrote:


    Apples beating Microsoft....

    Googles beating Apple....

    Microsoft beating Google....

    sounds like rock paper scisorrs to me.... how about all 3 are making huge money despite the progress/failures of each other

  • Report this Comment On May 31, 2010, at 5:21 PM, ReadEmAnWeep wrote:

    Google is doing just fine. Maybe keep the conversation relevant to the major sources of income for a company?

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