Google hired a key former Microsoft exec to lead G Suite and take on Microsoft Office. Experts say it's a smart move, but Google has a long way to go.

• Earlier this week Google hired Javier Soltero to lead its G Suite division. Soltero was previously head of strategy for Microsoft's Office suite of productivity tools, putting him in direct competition with his old division.
• Hiring Soltero is part of Google's longer term strategy to grow its enterprise customers. Soltero brings the experience with business and commercial products that G Suite needs to get to that next level.
• However, some industry analysts say Microsoft's lead is so far ahead that Google has a long way to go before they truly catch up. Microsoft dominates the space for business productivity tools.
• Google said it had five million paying customers for G Suite at the end of 2018. Microsoft on Wednesday said in an earnings release that it had 200 monthly active users of its Office 365 suite for business, and another 35.6 million consumer subscribers.
• Analysts say Google will need substantially better product than Microsoft to take some of its market share in the space.
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Earlier this week, Google announced the hiring of Javier Soltero, once a rising star at Microsoft, as its new vice president of the G Suite productivity tools. Soltero previously headed up strategy for Microsoft Office, meaning that this new role at Google puts him in direct competition with his former team.

Analysts who watch the industry said hiring a seasoned exec like Soltero to head G Suite - which includes business versions of tools like Google Docs, Google Drive, and Google Hangouts - is another signal that the search giant is getting more serious in its efforts to take on Microsoft's dominance in the productivity space.

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More broadly, recently-arrived Google Cloud CEO Thomas Kurian has been ramping up its efforts to catch up to Amazon and Microsoft, which lead the cloud computing space. G Suite, part of the Google Cloud business unit, represents an important part of that strategy.

Patrick Moorhead, President and Principal Analyst at Moor Insights & Strategy, said while G Suite is strong in schools and small businesses, businesses are still mainly using Microsoft's Office 365.

"Google is primary a consumer company and Microsoft is primary an enterprise company," Moorhead said. That's why Google is trying to bring in as many commercially focused people as they can, he said. "What they needed was his background with business and commercial products," Moorhead said of Soltero.

Microsoft dominates the space for business productivity tools. Moorhead estimates that Microsoft has about 95 percent of the market.

Google said it had five million paying customers for G Suite at the end of 2018. Microsoft on Wednesday said in an earnings release that it had 200 monthly active users of its Office 365 suite for business, and another 35.6 million consumer subscribers.

A 'long and challenging road ahead'

Daniel Newman, Founding Partner and Principal Analyst at Futurum Research, echoed Moorhead's sentiments, and said Google has a "long and challenging road ahead to catch up to Microsoft."

"Microsoft is on a tremendous run, and while having an insider like Soltero at Google will certainly add a quality strategist, I believe Google is looking for insiders that can help the company get to the next hurdle," Newman said. He added that Soltero's deep knowledge of Microsoft's strategy is likely seen by Google as an asset but it will still be hard for G Suite to truly catch up given Microsoft's lead in the space.

Microsoft is able to keep its dominance mainly because its product is reliable - and, historically, always has been over the last several decades, such that IT managers have little incentive to try something else. Google, by comparison, is a relative newcomer, and G Suite has had "fits and starts," Moorhead said, with products getting added and removed from the offering amid broader strategic shifts over the last several years.

"IT doesn't like that. IT doesn't like changing things from year to year," he said.

Moorhead also said Microsoft surprised many with its Office 365 cloud software suite. Thanks to its pioneering Google Apps products, the search giant long had an edge on Microsoft when it came to browser- and app-based productivity tools. That lead lasted until the advent of Microsoft Office 365, Moorhead said, and the renewed focus on Android and iPhone apps that came with it.

"Microsoft had been a laggard in smartphone until Office 365," Moorhead said.

Soltero was part of that push. He came to Microsoft in 2014 after it acquired his mobile email startup Acompli. The app was then rebranded as the Outlook app for iOS and Android, just weeks after the purchase.

The move to acquire Acompli, hire Soltero, and relaunch it as a flagship mobile app was widely seen as one of the first signs of then-new CEO Satya Nadella's embrace of Apple iOS and Android, rivals to Windows.

What comes next

Analysts and customers will be looking to see whether Soltero can take G Suite to the next level, competitively speaking.

Brent Thill, Managing Director at Jefferies, said that while hiring Soltero is a nice win for Google, he doesn't think it will change the competitive dynamics between the two companies. "Two-horse race between the two with plenty of opportunity for both," he added.

Moorhead thinks one of Soltero's challenges at Google will be to help develop G Suite with more features, while making the individual projects work nicely with the market-leading Office suite. For example, he says, users should be able to upload a Microsoft PowerPoint document into Google Slides and be able to edit it, rather than just view.

More broadly, Moorhead says, Soltero will have to make the most of Google's relatively small market share by integrating tightly with tools from other vendors. Microsoft is always rolling out new tools and features for Office 365, including newer additions like the Teams chat app - each guaranteed to work nicely with the rest of the Office suite. Google can't claim such an advantage, which makes partnerships all the more important.

"When you have low market share you have to work better with other stuff," Moorhead said.

A winning strategy

On the subject of Teams, Moorhead said that he'd like to see some more clarity from Google when it comes to its competitive response. While Google owns several video and chat tools under its Hangouts brand, they're relatively unpopular compared with the likes of Microsoft Teams or Slack.

On that note, Newman said while Google can continue to grow, it will need something substantially better than Microsoft to take some of Microsoft's market share.

"Google's continued refinement of products and overall enjoyable user experience will enable the company to continue its growth, but to materially dent Microsoft's ecosystem, they will need a product that performs notably better than Microsoft," Newman said.

He added that "given Microsoft Office has had a long ascent to its current size, it is difficult to say whether [Soltero] really can bring the secret sauce that has driven the continued growth and domination of Microsoft."

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