Google, Sun Take Aim at Microsoft

Google Office?

Google Inc. on Tuesday hinted that it might add free word processing and spreadsheets to its rapidly growing lineup of services, challenging Microsoft Corp. in setting the agenda for the next wave of technological innovation.

At an often confusing Silicon Valley news conference, Google Chief Executive Eric Schmidt touted a wide-ranging deal with Sun Microsystems Inc. to work together and promote some of each other’s products -- including the Sun-backed OpenOffice, a free program that duplicates the core features of Microsoft’s Office package of productivity programs.

Pressed repeatedly to explain how Google might exploit OpenOffice, Schmidt and Sun CEO Scott McNealy coyly refused to discuss specifics. But Schmidt made it clear that he envisioned a computing environment in which applications live on the Web, independent of Windows or any other operating system.

The Sun deal is “a tip-of-the-iceberg kind of thing,” said John R. Rymer, an analyst with Forrester Research. “If Google gets involved and could put real resources behind it, then you might have something, a real alternative to Microsoft Office. Wouldn’t that be interesting?”

Google has built a broad catalog of free, advertising-supported services that work on almost any computer with an Internet connection. Google already offers online services such as e-mail and mapping, and the company is working on a calendar program that it plans to release soon, according to a person who has seen the program.

Schmidt’s vision is not new, but Google may be the first company with the financial heft, technological acumen and loyal users to potentially pull it off. Microsoft views Google’s rise as a threat to its long reign over the Digital Age, which has been cemented by the dominance of the Windows operating system and Office.

So-called open source software such as OpenOffice, the Firefox Web browser and the Linux operating system is free and maintained by thousands of users. The rise of such software poses a direct challenge to Microsoft. The company’s top moneymakers are the two units that produce Windows and Office.

Many analysts, though, were left baffled Tuesday because Google and Sun were so vague. Microsoft dismissed the announcement.

“What’s there to say?” a Microsoft spokeswoman asked. “There’s not much of an impact for us.”

The partnership between Google and Sun will begin modestly. Mountain View, Calif.-based Google agreed to buy more Sun computing equipment, and Santa Clara, Calif.-based Sun vowed to buy ads that appear beside Google’s search-engine results.

Sun also will make Google’s toolbar program, which performs searches and other functions at the top of the Web browser, available for download when computer users download Sun’s Java program, which powers many Web applications. Sun says Java is downloaded 20 million times a month.

Google also said vaguely in a news release that it would “explore opportunities to promote and enhance” OpenOffice.

The lack of specifics caused several analysts to quip that the news conference appeared to be little more than a favor from Schmidt, a former Sun executive, to McNealy, his former boss.

“What if two of the industry’s biggest luminaries decided to hold a press conference and everybody came, but there was no news?” Yankee Group analyst Laura DiDio said. “This announcement at this point lacks substance, context and specifics.”

The partnership is “merely propaganda” until some products emerge, said Rob Helm, an analyst with research firm Directions on Microsoft. Creating Web-based programs that function without delays and other hiccups, especially programs as big as productivity applications, is extremely tricky, he said.

“But Google knows how to do it as well as anyone,” he said.

There are strategic reasons for the tie-up. Sun has been a longtime rival and critic of Microsoft, and it gets a powerful ally in Google.

“The motivation behind the Sun-Google alliance is obvious: In unity there is strength,” DiDio said.

For its part, Google is locked in an increasingly bruising fight with Microsoft. Steve Ballmer and Bill Gates, Microsoft’s top executives, have vowed to beat Google in the search game with a homegrown search engine.

And Google is bringing the fight to Microsoft’s home turf by launching programs such as its desktop search and Sidebar programs, which allow computer users to skip some key functions of the Windows operating system in retrieving personal data and Web information.

Google also is looking for ways to diversify its business, which is almost entirely reliant on ads delivered with search-engine results. The nearly $11 billion in revenue that Microsoft made from office productivity tools during its last fiscal year looks tempting, said Citigroup Investment Research analyst Mark Mahaney.

“Although [the market] is currently dominated by Microsoft, it does offer a sizable opportunity for Google,” he wrote in a research report.