Two giants sit at the top of the office suite market. One was cloud native. The other — tethered to servers — had to meet its opponent at the new playing ground.
When Google launched G Suite, a cloud-friendly version of Office, Microsoft responded with Office 365. Microsoft, had familiarity on its side.
Microsoft's legacy anchored the company in the market; Microsoft Office and Office 365 are the top two solutions, according to Gartner. Customers are either running both or using a hybrid model.
Google — the only other notable opponent in the email and authoring market — can't catch up.
Microsoft had 87.5% of the email and authoring market (formerly named the office suite market) share in 2018, according to Gartner's 2019 market research. Google held 10.4% of the market. G Suite grew 15.6% in 2018, whereas Microsoft had an 8% growth.
Google is gaining about 1% of the market share every year, said Roth.
In terms of revenue, Microsoft made nearly $16 billion in 2018 compared to Google's roughly $1.9 billion in office suite. In 2018, the market was worth 18.2 billion.
Top office suite vendors
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The parallels between the companies have diminished as Microsoft found success in places such as collaboration chat platforms — where Google has not made inroads.
What Google lacks is Microsoft's home office tenure; it has to fight to break customers' apathy to change.
"Once you really dig into it for any decent sized company, you realize there's unskilled workers for whom any little user interface change stops them in their tracks," Craig Roth, VP analyst at Gartner, told CIO Dive. Google's "fancier" elements don't always translate.
A new home
With a cloud-ready competitor on its tail, Microsoft had the task of converting its flagship Office suite to a digital space. "Microsoft has kept on fighting," said Roth.
With only two dominate players in the office suite market, neither are failing. But Google has yet to see the same success as Microsoft Teams in collaboration solutions.
Microsoft clamored for a successful enterprise collaboration tool for years. The company turned attention away from Skype for Business in favor of Teams and the effort paid off — Microsoft declared Teams its fastest growing app in company history less than two years after its debut.
While enterprise customers don't single out an application in a suite to differentiate the companies, vendors are betting on collaboration. Gartner expects 60% of enterprise application software providers to issue a form of collaboration functions by 2023.
Google is under pressure from Microsoft to offer an equally compelling solution in collaboration.
In January The Information reported a unified communications app is in the works at Google. Last week Business Insider reported the company will begin making the G Suite available to individual departments, adopting a "Trojan-horse" methodology to sell its product.
Marketing G Suite in segments is a way for Google to "enable Google evangelists within a company to disrupt the status quo every day," said Carrie Basham Marshall, CEO of Talk Social to Me, told CIO Dive. "This is Google's 'hold my beer' moment as it jumps into the ring against the dominant competitor from Redmond."
It's a grassroots approach to getting G Suite in the enterprise. Sources told Business Insider the "Trojan horse" is not meant to boot customers from Microsoft — a feat that is near impossible — but to attract Google loyalists within an established Microsoft customer.
Google got feedback regarding how customers pick apart G Suite offerings, including Chat or Voice, Dan O'Connell, VP analyst at Gartner, told CIO Dive. Google's view was in having separate clients, using pieces of the G Suite instead of all of it. "I can see where particular users may have a preference towards keeping them separate."
By contrast, single clients are customers who subscribe to a whole suite offering and are more likely in the collaboration market. RingCentral and Microsoft have single clients and Cisco is moving in that direction too, said O'Connell.
The one-stop-shop is the mantra of Microsoft and Google with their suite of productivity tools, perfect for the single client looking for an all-in-one software suite.
If everyone in a company adopted the Microsoft suite, the cost switching to another vendor is too high. "You've got Microsoft customers for life," said Basham Marshall.
Customers that adopt G Suite don't necessarily do it for different features (because they are virtually the same). Companies make the switch because they want a new form of productivity, said Roth. It's "pressing the reset button on how people work … [it has] nothing to do with the exact features of the product."
Too much of a good thing?
Google has more to prove than Microsoft in collaboration tools. It also has a history of confusing enterprise customers:
When the company announced it would dismantle Google+ for consumers in 2018, many enterprise customers were left puzzled. Businesses didn't understand the enterprise version was getting a revamp, not a cancellation.
Hangouts' future has been hanging in the balance for months; a unified app could serve as its replacement.
Between 2018 and 2019, Microsoft graduated from the "challenger" identification to "leader" on Gartner's unified communications as a service Magic Quadrant. Google remained a challenger. Other opponents include Cisco, Dialpad and RingCentral.
Google's competitors in the collaboration space include Slack and Workplace by Facebook but neither are featured on the UCaaS Magic Quadrant because the platforms aren't pursuing native functionalities and instead rely on integrations with best of breed players, such as Zoom. Slack and Workplace market themselves as a central hub for communication, complimenting other vendors' services.
Still, Google's placement in the Magic Quadrant improved because of Google Voice, a native cloud telephony offering based on the company's intellectual property, said O'Connell. The company previously relied on APIs to partner with RingCentral or Dialpad, for example.
Competitors might have one thing in common: deploying features no one asked for.
"I think the biggest problem in the collaboration industry right now is that vendors are oftentimes creating solutions for problems that don't exist," said Basham Marshall.
One of Basham Marshall's clients uses an intranet in a box solution. The solution offers users the ability to customize notifications "to the point where it's almost like you're going to a buffet and you have 500 things in front of you to choose from," she said. There isn't a need for that much choice. Modules and bots aren't enhancing the user experience.
A unified app can address "the issue of app fatigue that is still so very prevalent across organizations today," said Mike Hicks, CMO of Igloo Software, in an email to CIO Dive.
The consumer world arguably created the market for communication and collaboration platforms in the enterprise. Employees wanted to mimic their methods of communication in their private and professional lives.
It's still the consumer trend to use different apps for different purposes, such as Instagram for photos and YouTube for video.
Microsoft has its Office suite divided into single activities, said Basham Marshall. "I haven't yet seen a vendor who has been able to create a single application that launches you into all of your collaborative tools. And frankly, I don't know if that's possible or if that's the way of the future at all."
Correction: A previous version of the article omitted Mike Hicks' full name and title.