Google (NASDAQ:GOOG) rolled out some significant updates for Google Docs last week. It added support for around 450 new fonts which can be used in Google documents, and also added 60 new templates and improved support for screen readers in Google Docs. It also added more options to insert images in docs, support for Google Drive and some other minor features related to charts in spreadsheets, custom app scripts etc. 
While Google Docs is one of the most widely used cloud based productivity software suite, it is still way behind Microsoft Office in terms of features. It competes primarily with Microsoft‘s (NASDAQ:MSFT) Office 365 cloud suite, which also offers much better features and integration with Office.
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Google recently launched its cloud storage offering — Google Drive – which is integrated with Google Docs, and continues to roll out new updates and features which improve the usability of Google Docs. We expect it to continue to keep improving Google Docs.
Google generates revenue from Docs through Google Apps subscriptions and also uses usage data from Google Docs to improve its search and ad targeting features. Since search ads account for almost all of Google’s revenue, even an incremental improvement could significantly improve its overall revenue.
Google Docs and Apps directly account for less than 1% of Google’s total value. We currently have a $680 Trefis price estimate for Google, which stands nearly 10% below its market price.Notes: