Google and Microsoft are now going head to head in cloud based services. Each company has its own strengths. Microsoft dominates the PC and laptop OS arena. Android, has a more powerful presence with its Android OS on laptops and phones. Google also has a powerful lead in free email.
For this post, I'm ignoring third big competitor in the arena, Apple, since they do not seem to be pushing for dominant control of cloud services beyond users of their own phones, tablets, and laptops.
Google is seeking to expand its presence by pushing Google Drive, a host of applications that allow document creation and collaboration, among other things. This puts them more and more into competition with Microsoft Office. Microsoft has been moving its Office Suite to the cloud with MS Office 365. While you can still download MS Office onto your hard drive, more and more work can be done directly in the cloud. The subscription model further makes Microsoft look more like a service provider than a software seller.
Microsoft's strategy seems clear. It wants to use its market dominance in the Office market, to move individuals and businesses into its cloud services. It makes sense. Businesses especially are so tied into the MS Office world that it is nearly impossible to collaborate with other businesses without having MS Office yourself. If they can leverage that, as well as dominance in Outlook to draw users into its cloud storage and online email services, it becomes a major player in that field, and moves away from the collapsing market of selling software to PC users.
Google's strategy similarly reflects its desire to leverage its strengths in search and email to move people into its other cloud services. Google encourages its Gmail users to use Google Drive, where they can create and share documents, spreadsheets, and other works.
Microsoft's greatest weakness is probably its recent reputation for overpriced buggy bloatware, for falling behind in the race to keep up fast paced technology trends, and for its tendency to gouge customers for maximum short term profit. The fact that its solution is much more expensive than Google's only contributes to this preconception.
Google's greatest weakness is its lack of any reputation in the enterprise arena. While businesses use its search services or other online free services such as Google Maps, they have been reluctant to move to Google's enterprise email offerings or use of Drive as the only way to create documents. At best, businesses use them as a supplement for online collaboration, while still relying on MS Windows computers running MS Office for office work and MS Outlook connected to MS Exchange for email.
Microsoft has every incentive to tie Windows, Office, and Outlook into its cloud services and offer a smooth transition for businesses. Microsoft has zero incentive to make it easier to access your Google Drive documents from MS Office or to integrate Windows into your Google cloud storage, or improve Outlook interoperability with Gmail. If history is any guide, you will see MS create deliberate bugs that make interoperabliity with Google a real headache.
This makes Google's fight much harder. Google will not capture the OS market any time soon. Google Chrome will not replace Windows in the foreseeable future. Android does not seem to be able to leap from tablets to laptops. Therefore, Google has to focus on making its cloud services so much better and less expensive that people will go out of their way to use them.
To do this, Google must come up with a more powerful office suite. Google Docs, Google Sheets, and Google Slides are ok for simple documents. But they simply do not have the tools that professionals need to create more complex documents. One great option would be a partnership with an open source Office suite like LibreOffice. Another option would be to buy a dying competitor like WordPerfect Office.
Either way, Google could integrate the office application into Google. It could allow subscribers to download the office suite, or make the suite itself cloud based. Either way, users would have a much more powerful office suite with which to use Google's online document system.
Google has done well with individuals who want convenient free apps. But if it wants to get the more profitable enterprises to get on board with Google, it needs to have a serious Office suite for business users.