Microsoft's Hotmail founder goes for the (wrong) Office jugular with Live Documents

Sabeer Bhatia, one of the co-founders of Hotmail (bought by Microsoft for $400 million ten years ago), is on a mission to lobotomize Microsoft's $20 billion Office business. He has an uphill climb.

Bhatia is behind Live Documents, a web-based competitor to Microsoft Word, which purports to offer enterprises an upgrade path beyond the $400/seat offer from Microsoft. The question is, "Don't we already have Google Docs for this?"

Designed to help consumers avoid expensive upgrades and to foster collaboration on a secure internet platform, Live Documents matches features found in Office 2007, the most recent version. It will be given away to individuals with 100MB of free data storage space per user. Companies will pay for the system, either hosted remotely or on an internal server, at a discount to Microsoft?s licensed technology. Aricent, an Indian software services group with 6,700 employees, is the first client.

Live Documents is similar to Google Apps, launched in February and used by companies including Proctor & Gamble, General Electric and Capgemini as a cheaper alternative to Microsoft. However, Mr Bhatia claims that his product is superior to Google's in its range and quality, most crucially because it mimics Office 2007. Most of Office's estimated 500 million customers have yet to upgrade from the 2003 version, while it is not available for Apple computers.

He said. "This will do for documents what Hotmail did for e-mail."

Fill computers with lots of spam? I can't wait.

Actually, it's unclear to me why this is any better than Google Docs or the slew of other online document services, all of which purport to be the death of Microsoft Office (and yet I still see it limping around from time to time, buried under the weight of $20 billion in sales :-). The best alternative I've seen to Office is actually OpenOffice, not some sexy, new web-based competitor.

Yet nothing seems to really touch Microsoft's Office business. Why? Because all of these efforts look backward, rather than forward. The future isn't web-based document creation. If anything, it's an email client (like Zimbra) that does away with the need for "documents" at all and makes the focus on collaboration and distribution, not creation.

The future of the desktop is not an online desktop. It's getting rid of the desktop metaphor altogether. The future of an office suite is to dump the office and focus where people spend their time: email, IM, SMS, blogs, etc. We increasingly collaborate as we create rather than create so that we can then collaborate on what we've already done.

Look at Microsoft's idea of office collaboration. It's mired in the era of Flock of Seagulls and The Buggles. Microsoft is desperately trying to upgrade this vision with Sharepoint because its Exchange technology is so old and creaky that it can't support the innovation that would other ensure Microsoft's next two decades of dominance.

Now is the time to go for the Microsoft Office jugular, but not with Yet Another Web-based Office Competitor (YAWBOC). That's the wrong way to disrupt a market. A company like Zimbra/Yahoo can shift the rules of the game to focus on email as the "Office suite," not some stodgy old Word program.