Google Apps Can Win Microsoft Office Customers with DocVerse
Google (NASDAQ:GOOG) recently acquired DocVerse, a technology startup that makes it easy for people to edit Microsoft Office files online. Microsoft’s (NASDAQ:MSFT) Office software dominates the enterprise productivity software market with share of around 95%.
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We believe that DocVerse will make it easier for users of Office products like Word, Excel and PowerPoint to transition to Google Apps. We expect that Microsoft will lose share in the productivity software market going forward due in part to increasing competition from Google Apps.
Below we explain the significance of Microsoft Office to Microsoft’s stock and Google Apps to Google’s stock, as well as how Google threatens Microsoft’s dominance in the productivity software market.
Microsoft Office constitutes around 30% of Microsoft’s stock
Microsoft’s Office Suite is a group of desktop applications used primarily for word processing (Word), spreadsheet preparation (Excel), presentations (PowerPoint), and email (Outlook). The software is used by a majority of consumers and businesses, making collaboration between users easier and helping to perpetuate demand for the software.
We estimate that Microsoft Office (including Microsoft Dynamics) makes up 30% of the $32 Trefis price estimate for Microsoft’s stock.
Google Apps constitutes around 3% of Google’s stock
Google Apps refers to Google’s web-based office software that includes e-mail, calendar, word processing, spreadsheet and collaboration programs. We estimate that the Google Apps constitutes 3% of the $703 Trefis price estimate for Google’s stock.
DocVerse deal with Google could threaten Microsoft’s dominance
Google will make DocVerse’s technology part of its Google Apps, allowing users who upload Microsoft files into Google storage to edit and collaborate on them.
In addition to allowing people to do things like edit PowerPoint slides online, DocVerse allows users to comment on documents and share those comments with other users online. We believe such attractive collaboration features could further encourage users to migrate from Microsoft Office to Google Apps.
We expect Microsoft’s share in the Productivity Software market to decline to 89% by the end of Trefis forecast period. You can modify our forecast below to see how Microsoft’s stock value would be impacted if its share in the enterprise productivity market were to decline more than we forecast as a result of higher adoption of Google Apps.
For Google, we expect that the Number of Google App Users will increase to 89 million by the end of Trefis forecast period, up from an estimated 20 million users in 2009. You can modify our forecast below to see how Google’s stock price would be impacted if the Number of Google Apps users were to increase at a much faster rate than we forecast.
For additional analysis and forecasts, you can view our complete models for Microsoft’s stock and Google’s stock.