by: Jennifer Rice

I read two articles this morning about how Google's new spreadsheet doesn't come close to competing with Microsoft Excel. Jake at GMSV writes,

"Too bad 'Excel for Dummies' was already taken. Google uncrated its latest indignity to Microsoft and its Office suite this morning, a Web-hosted spreadsheet program for the collaborative management of structured data. A half-assed version of Excel, Google Spreadsheets uses many of the same formulas and file formats as Microsoft's ubiquitous product, but is missing the program's more powerful features -- macros, charting, autofilter and drag-and-drop capabilities."

David at WebProNews writes,

"Google Spreadsheets looks interesting, and we're looking forward to playing with it when Google starts inviting people into the controlled beta. But without advanced features like macros or pivot tables, Google's newest Lab experiment just isn't close to Microsoft Excel."

Ok, show of hands... how many of you actually use pivot tables and macros? The 80/20 rule would suggest that 80% of Excel users use 20% of its features... and that's probably being too generous. Sure, enterprise users wouldn't go for Google's hosted version due to security risk, but that's beside the point.

Google's strategy is not to create me-too Microsoft products that are loaded with tons of features. As I see it, Google is taking a much longer view, going for unserved and overserved markets that Microsoft apparently doesn't want. And they're doing it brilliantly, under the experimental "beta" banner that tells people not to take them too seriously. This is the strategy outlined in Clayton Christensen's book, The Innovator's Solution. (If you're in business and haven't read this book, stop reading this post and order it now. Seriously.)

Let's make this into a much broader discussion around the general principles.

  1. Many products are too complex for a lot of people (domestically and internationally.)
  2. People don't like to pay for what they don't use.
  3. Many would be willing to pay less for a niche product with less functionality.
  4. Unserved and overserved markets can often be larger than established markets served by incumbents.
  5. Industry disruption happens with innovators create simple, low-cost options that are initially scoffed at by established markets.

The Japanese car manufacturers were initially not perceived as a threat to American car manufacturers. The Japanese started at the bottom of the market, selling inexpensive and lower-quality vehicles that didn't yield the high margins of bigger luxury cars. They were considered 'safe' competitors because they tackled a market that the incumbents didn't want. Yet the Japanese slowly and quietly gained experience, improved quality, kept costs low and crept up-market. Now American car makers have been pushed into a corner; they still lead in trucks and SUVs, but not much else.

So going back to Google's "half-assed" version of Excel: if they're following the classic path of industry disruption, they should be pleased when they hear scoffing remarks about their beta products. This allows them room to establish a foothold at the base of the mountain, serving customers that Microsoft (apparently) doesn't want. They can gain experience, add new features, gradually move up-market, and eventually take the high ground.

If Microsoft really wants to keep Google out of its territory, it must not cede the bottom of the market. We're way overdue for a cheap, stripped-down version of "Office Lite" for all those new computer users domestically and internationally who don't need the extensive functionality of the current product. But if Microsoft acts like a typical incumbent, they'll be more concerned about potential cannibalization of its current product and will keep pushing to add new whiz-bang features that target an increasingly narrow user base.

How do these principles apply in your business? If you work for an incumbent in a mature industry, is there a sizable market that could use your product, but with fewer features and at a lower price point? This is probably where a smart competitor will attack.

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