I was recently asked to comment on a startup that is attempting to compete against both Micrsoft Office and Google Docs & Spreadsheets.
Here is what I suggested:
“Historically, there have been any number of office products that performed better than MS Office but weren’t able to capture share. As a small player, it is extremely unlikely that your fate will be any different – don’t expect to beat Microsoft and Google at their own game.
“Your approach, therefore, must be to develop a fantastic product targeted at a specific niche. The weakness of Google and Microsoft is that they are mass-market products and serve everyone adequately, but no one well. Choose either a niche market segment or a specific functional area – and dominate it. For example, mid-sized law firms, or word process that integrates with CRM for sales folks. If you develop best-in-class applications for a niche, not only will you have a compelling value proposition and easily identifiable target market, but it is much easier to achieve critical mass and become the dominant player.
“One point to note: interoperability is key. There must be seamless, flawless opening and saving of Microsoft apps. There’s the old saying within Microsoft that the next version of office isn’t ready to ship until it breaks previous compatibility standards. It’s your job as a competitor to fight them in this arena – to stay up to date so that your users won’t experience any headache when interacting with the other 98% of users.”