You caught me, man! I actually did have a few paragraphs tackling this but to be perfectly honest A) it was really boring and B) given my status as an MS employee I do need to be a little careful with what I say around this. Not even so much around pro-Microsoft stuff, but more around stuff that is against efforts that our competitors are doing. In other words, to fully address this I'd have to talk smack on Google docs, which could be seen as what we like to call in the consulting world as a CLM (career limiting move) :)
That being said, anyone who has been using web-based Office alternatives and wants to address this, I'd love to hear thoughts either here or within the comments in the original post.
It's a huge market, and it's uncracked despite user pain. Why?
It's a boring question in terms of technology, but not in terms of thinking about user needs and behavior. And it's pretty interesting in terms of the amount of money that could flow if the market were cracked, too.
I think the two big reasons the Office market remains uncracked are:
1) incompatibility fears
2) opportunity cost
Incompatibility fear is a big one. A good friend refuses to use MS Office for Mac because she is afraid of incompatibilities. This is rational. The documents she's sending out impinge on multimillion dollar deals, some of which get finalized at the 11th hour. She can't tolerate additional risk in her workflow.
Continuing to use her, and Office for Mac, as an example, "opportunity cost" means that she can bill to her clients at a pretty good hourly rate, or she can spend her time learning about and deploying Parallels and Bootcamp so she could enjoy OS X and still be confident that her Office documents will be viewable and editable by her colleagues. This just isn't a good use of her time, unless she happens to enjoy technical puttering (she doesn't).
I think she's pretty emblematic of this problem. If you can't get her to use an web-based Office substitute, I submit that you haven't cracked the Office market.
I think that this problem is harder, and in some ways more interesting, than the technical problem of how to make a nifty Office-like web app.
I think that online office tools (Google docs, zoho) are slow and extremely tedious. They are pretty looking, but usability is worse (slower) than the 1987 versions of word processors on PCs.
I think office alternatives will have to gain traction on other devices (read: low-cost browser-only computers, fancy mobile devices), and from there attack the regular consumer market. There is just no reason to use a web based alternative if MS office is accessible.
That being said, anyone who has been using web-based Office alternatives and wants to address this, I'd love to hear thoughts either here or within the comments in the original post.