Ah, but what about 2010? That, claim the editors at Smartgrid, will be the year that Google and Microsoft really roll up their sleeves and go to war. In everything from search to office apps and Internet browsers, the two behemoths will roll out fancy new services designed to erode their rivals’ revenue streams. “Both companies are largely betting their collective futures on this battle, so the stakes are huge,” said industry analyst Rob Enderle. “Microsoft is going to partner and try to starve Google out of content and partners. Google is going to work against Microsoft’s pricing model and starve them out of money. Both are, for once, largely going after each other’s relative weaknesses and leveraging their respective strengths, so this will likely be a battle for the history books.”
This sort of competition is good for consumers. I think only a company with Google’s prestige can convince many purchasers of Office that its price point is a relict of the 1990s and the era of shrink-wrapped software. Free is probably not viable (or at least not exclusively), but there’s no natural reason that Microsoft has to reap the margins it currently does.