As Google has built up its online productivity products, it's had a harder and harder time maintaining its stance that it's not competing directly with Microsoft. Now the company is dropping any pretense that it's not competing head on, as it is releasing a paid version of its online office products, which includes email, a calendar, spreadsheets and a word processor. This is a departure from the company's traditional strategy of monetizing all of its services through advertising, and it hopes that at $50 per user per year, it presents a much more compelling value than Microsoft Office. Already, some big companies are using Google apps, including GE and Procter & Gamble, which one can assume are big spenders on Microsoft products. Of course, Google's entry into paid software isn't likely to be a cakewalk. When companies are actually paying for software, there's an assumption of excellent reliability. Error messages like "Oops, we're sorry, try again in a few minutes" probably won't go over very well. Furthermore, business will expect some level of software support, something that Google doesn't have much experience with. And of course there are technical challenges as well, such as how users are supposed to stay productive when they're offline. Still, there's no getting around the fact that this is a direct shot at one of Microsoft's biggest cash cows. While it probably won't steal a lot of business right away, it's likely to chip away on Microsoft's margins over time.
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