One of Google’s most brilliant strategies to conquer the online world hasn’t made them more than a trivial amount of revenue and perhaps never will. But they’ll be OK with that, because Google is slowly encroaching on Microsoft at a game that company has dominated for over a decade with the Microsoft Office Suite.

Google Docs are still a small part of both the home and enterprise software market but they appear to be slowly getting incorporated into home desktops and enterprise applications around the globe, and this poses a huge threat to the Microsoft Office dominance in that market.

Wordsmith Nick Carr has it right and as usual puts the point cleverly:

[Google] knows that, should traditional personal-productivity apps become
commonplace features of the cloud, supplied free or at a very low price, the
economic oxygen will slowly be sucked out of the Office business. That doesn’t
necessarily mean that customers will abandon Microsoft’s apps; it just means
that Microsoft won’t be able to make much money from them anymore. Microsoft may eventually win the battle for online Office applications, but the victory is
likely to be a pyrrhic one.

Pyrrhic victories are hardly the stuff of which success is made, and Carr’s point is excellent here. Google does not even have to win some of the battles they have been fighting to win the big war for massive online dominance and untold online riches.

Google’s recent brilliancy along these lines was forcing the 700MHZ spectrum open without spending a dime on it. Google was involved in the big spectrum auction but probably had no interest in winning. Rather, Google just wanted to make sure the big winner (which happened to be Verizon), would be required to adopt certain rules that happened to give Google big advantages in the mobile space in terms of the ability to capitalize on that market. I’d agree with Google that they were good rules - but that’s beside the immediate point here, which is that Google’s has been extremely effective at exploiting resources - or gaining access to them - without spending nearly as much as their competitors.

Historically Microsoft did this kind of thing as part of their massive capitalization and ability to spend. Google appears to be pulling this off without much spending at all, giving their competitors even more Pyrrhic victories while Google hauls away the really big online treasure.