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Google Allies With Sun to Offer Challenge to Microsoft Office

Posted on: Saturday, 8 October 2005, 09:00 CDT

By Peter J. Brennan and Connie Guglielmo

Google Inc., the world's most-used Internet search engine, and Sun Microsystems are joining forces to offer online word processing and spreadsheet functions in a direct challenge to Microsoft Corp.'s dominance.

Google will distribute Sun's free OpenOffice.org software for personal computers, the companies said Tuesday at a press conference in Google's home town of Mountain View, Calif. Some downloaded Sun programs also will include Google's toolbar.

The alliance may present one of the strongest competitors to Microsoft's Office word processing and spreadsheet products, which generated $11 billion in sales last fiscal year. Google is using Sun to accelerate its battle with Microsoft, adding a missing piece to its growing list of features that includes the Google toolbar, e- mail and desktop search.

"This really should be seen as competition heating up between Google and Microsoft, with Sun providing the ammunition," said Michael Cohen, a San Diego-based analyst for Pacific American Securities.

The companies didn't say how Google will deliver the programs, or whether or when they will be available on Google's sites.

"We need the benefit of their brand," said Jonathan Schwartz, Sun's president. "They need the benefit of our technology."

Google will pay Sun each time a customer downloads Sun's Java desktop software with the Google toolbar, Schwartz said.

"This is the thin edge of a large, powerful wedge," said Michael Dortch, an analyst for technology consultants Robert Frances Group. "Sun and Google pulled back the corner of the entrance flap to what could turn out to be a huge tent."

The announcement reunites Google Chief Executive Officer Eric Schmidt with Sun CEO Scott McNealy. Schmidt worked for Sun from 1983 to 1997 in various posts, including chief technical officer. The alliance comes 18 months after McNealy and Microsoft CEO Steve Ballmer patched a feud and agreed to make their products more compatible. Microsoft also agreed to pay Sun almost $2 billion to settle legal disputes.

At Google, Schmidt is pushing further into Microsoft's territory. The company has moved beyond Internet search, where it leads Microsoft and Yahoo! Inc., into desktop search, allowing users to plow through all files on their PCs. About 78 million individual users visit Google sites each month, according to Nielsen/ NetRatings.

The Google toolbar, which sits on the desktop and links users to Web sites, e-mail and other products, is a linchpin in the company's challenge to Microsoft. Google could add "tens of millions" of customers through Sun's downloads, Schmidt said. That will help Google "monetize" its toolbar by selling more advertising, Schmidt said.

He wouldn't say if Google's toolbar would link to OpenOffice.org.

OpenOffice.org is an open-source product that is compatible with all major office products. It is free to download, use and distribute. Sun started the community in 2000 and is now its primary source for code. As well as a rival product to Microsoft's Word and Excel, it has a "presentation manager" program to compete with PowerPoint.

Sun and Google are betting that users will soon demand that they gain access to their files from anywhere, just like Internet e- mail, Dortch said.

"For Sun, a partnership with Google lends a lot of credibility," Dortch said.

Sun released its latest paid version of the OpenOffice.org program, called StarOffice 8, on Sept. 27. Sun charges for that version because the company has to pay fees for items such as fonts, clip art and spell-checker. The company touted it as being able to work with Excel, Word or PowerPoint.

The StarOffice suite is cheaper than Microsoft's Office, retailing for $99.95 and offered for download on the Web $69.95. Business customers are charged $35 a user.

A Microsoft Office Basic suite starts at $149, according to the Web site of Dell Inc., the world's largest maker of PCs.

Microsoft Office represents 28 percent of the company's sales. The unit provided $7.92 billion in profit, or 54 percent of the company's profit in the year ended June 30.

Source: Buffalo News

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