Change sucks: Why Google+ will flounder while Office 365 flourishes

Steve Balmer Office 365

Office 365 and Google+ are very different products, but they contrast very different competitive problems. Microsoft is the dominant vendor with regard to productivity applications, and Office 365 is designed to run against Google’s professional version of Google Apps, a vastly smaller challenger. Google+ is a nicely turned out social network product, but it is positioned against Facebook, the dominant provider of social networking services. There are huge differences between what you need to do as a dominant vendor and what you need to do as a challenger. That means that while Microsoft should be successful with Office 365; Google will likely fail with Google+, even though Google+ may be the more competitive product. At the core of this is the fact that people don’t like change.

Office 365 vs. Google Apps

Office 365 is a response to Google’s professional Apps efforts, It has a great deal of variability both in terms of what it offers and what you pay for it monthly, which is a nice way of saying it is complex. In some ways, the subscription pricing approach is very similar to how we pay for cable services, and is nearly identical to the model that IBM originally began with in both hardware and software. The long-term advantage of the subscription model is it provides a very predictable revenue stream, and it makes it very difficult to displace the vendor using it (because you typically sign up for multiple years) the disadvantage is it tends to slow growth, and it focuses the provider on costs rather than improving the product, which can cause the offering to fall behind.

Office 365 is basically a flexible combination of Office and Microsoft’s BPOS tools under a subscription license with web sync.

Office 365 Infographic

Google Apps is a hosted office productivity suite. It doesn’t need sync because it is mostly operated online and there is very little you can do disconnected (though that will likely change in a few months). It is a simple offering that only goes for $50 a year, but it is also far more limited. Were Google dominant, Office 365 would be too heavy (in fact it would seem they did make this overly complex) and really not very competitive. However, Microsoft is dominant, and that means Microsoft defines the solution, setting up Google Apps to be seen as inadequate for most Office users.

Google Apps Graphic

This isn’t to say Google Apps won’t find an audience, but most users will likely now see Office 365, even though it is overly complex, as more than adequate. If you are dominant, good enough, is good enough.

Google+ vs. Facebook

Google+ is almost a direct clone of Facebook. While it is an impressive effort, particularly on the discovery side, there appears to be little to drive you from Facebook to it. If emulation is the greatest complement, Google paid Facebook a huge compliment and the quality of Google’s offering is impressive. The problem for Google is that Facebook users seem to be relatively happy. There are concerns with regard to privacy on Facebook, which could play for Google if folks weren’t more concerned with Google’s privacy practices. Much as you likely wouldn’t be interested in an even trade for a house or car that is identical in all ways to the one you have, folks likely won’t switch from Facebook to Google+ in significant numbers. And with social networks, the big value isn’t the product, but the number of your friends that are on it.

Google Plus Circles

So, even though Google’s effortappears better than most Facebook’s competitors from a product perspective, it probably won’t pull a significant number of users from Facebook. At the core of this is one simple axiom: People really don’t like change. Even though Google+ may be a bit better, Facebook, which is dominant, is good enough to hold.

Change sucks

What most vendors seem not to grasp is that change sucks. Getting someone to move from a tool they are familiar with to a new tool is very difficult. Microsoft showcased how to do this in the early years with the strategy “Embrace, Extend, Extinguish.” This strategy worked when Office was established because Microsoft created a vastly better product than Lotus 1-2-3, the dominant competitor. Excel, the bridge product, was nearly identical to the Lotus offering. Microsoft Office sank Lotus with a combination of not requiring users to learn new skills, a bridge to embrace all the work they had done (it would read Lotus files and run Lotus scripts), and big advantages in terms of other capabilities (a good word processor for instance).

Google Apps never embraced Office very deeply, and it sucks offline (or at least it does now). Office 365 presents a near-seamless migration path by comparison. All Microsoft had to do was address the online advantage that Google had and close the price gap in order to retain dominance. (Though I do think they need to vastly simplify this offering.)

Google + diagram

With Google+, people have no reason to move. It isn’t vastly better, it is vastly similar. Given our hatred for change, there has to be something to drive the change. Recall Bing competing with Google search. Microsoft spent millions on marketing and incentives, and still only got around 10 percent of Google’s search market. Apple out-marketed Microsoft for years with Mac OS X, but only got around 4 percent of that market. It wasn’t until Apple came up with the iPad, a vastly different product, that the company got a big new user spike.

Wrapping Up

Microsoft and Facebook win in this comparison because they are the entrenched vendors; this is why Google is holding with search as well. We don’t want or like change. Microsoft, at least for those coming to Office 365 from Microsoft Office, has limited that change significantly, and we are already on the product. Google Apps remains simply too different, so Microsoft should be able to hold.

Facebook’s customers remain relatively loyal, and Facebook’s privacy problems are largely mirrored by Google, so Google+ has failed to demonstrate a reason for change. Therefore, Facebook should hold as well.

The lasting lesson is that people just don’t like to switch unless they are given a significant reason to. In both instances, Google (the vendor trying to drive the change) isn’t providing much of a reason to make it. For Google to be successful here, it really needs to grasp that “build it and they will come” only works in movies. People need the equivalent of a cattle prod to move to something new and different, even if it might be better. Google needs to buy or learn to make a cattle prod if it wants these efforts to be more successful.

The views expressed here are solely those of the author and do not reflect the beliefs of Digital Trends.


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