Google is eating Microsoft’s lunch, one tasty bite at a time.

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Microsoft just launched Office 2010 to great fanfare, and quietly slipped in a new free online version.  It looks like they may have finally realized that if they don’t cannibalize their core business with a web based offering, Google will.  Has the sleeping giant over in Redmond finally awoken, and can they defend their biggest cash cow from the future?

Some analysts say Google’s online offering can’t compete with Microsoft’s.  They have no idea.

Google Apps vs Micrsoft Office Daily Reach

We’ve been tracking the usage habits of hundreds of thousands of our users over the last two years, and you can clearly see that Google has managed to increase their daily reach from around 59% to 79%.  On the other hand, Microsoft Office has been steadily shedding users, losing about 9% of our population.

To get an idea of how relatively important each application in these suites are, here is a graph showing the full gamut.

Communication makes up about 18% of all computer usage.  Google proved you could do email in the cloud not only competitively, but for free.  Outlook and Gmail dominate these two companies’ suites in terms of unique daily users.  Gmail managed to increase their slice of the pie about 3%, while Outlook lost about 6% of the total.  That’s a 21% relative decline for Microsoft vs 7% relative growth for Google in arguably the single most important software sector.  Microsoft loses its integration advantage when people stop using big pieces of the suite, which may help explain the synergistic decline of Outlook and Excel.  It’s also interesting to note that Word and PowerPoint have been relegated to a tiny fraction of our users who seem to greatly prefer Google Docs.

If that was the whole story, things might look pretty grim for Redmond, and it’s no wonder they’re being forced to respond to web based offerings.  However, there is at least one more way to consider the data, and that’s in terms of the amount of time spent in particular applications, not just the number of people using them.

It’s clear again that email is the most important component in both companies portfolios, but even though Gmail has about double the users, the smaller population of Outlook users spend more time emailing than all the Gmail users put together.  Today, Outlook is the preferred weapon of choice for heavy users, but if I were an exec at Microsoft, I’d be paying very close attention to the direction those blue and red lines move from here on out.  You might also notice that in terms of spreadsheet usage, there is really only 1 option.

About the data:
RescueTime provides a time management tool to allow individuals and businesses to track their time and attention to see where their days go (and to help them get more productive!). We have hundreds of millions of man hours of second-by-second attention data from hundreds of thousands of users around the world, tracking in real time both inside and outside the browser.  We selected annual date boundaries for this set, to help reveal seasonal variations in usage, like the holiday dip in productivity.

About our software:
If you want to see how productive you are vs the rest of our users, you should check out our product tour. We offer both individual and group plans (pricing starts at FREE).



27 Comments on “Google is eating Microsoft’s lunch, one tasty bite at a time.”

  1. David Bishop says:

    Although this information has value, it’s in no way definitive. As all people being counted are your customers, they all have something in common and this commonality among them can skew the results.

    For instance, perhaps the people that use your product are people who are on the forefront of finding new and inventive ways to get things done, which is why they choose your product and also try Google Apps. But, that leaves a huge chunk of the population unaccounted for, and perhaps those that like the status quo are a much bigger chunk and also prefer Microsoft.

    I truly don’t believe across a random subsection of people that the numbers are so stark. I do believe people are moving to platforms for productivity apps other than Microsoft and one of them is Google. I am one of them. I simply don’t believe it is anywhere to this degree.

    Thanks for the data. As I said, I believe it has value – it simply needs to be accurately weighed by it’s acquisition.

    • Montana Low says:

      Our users may include more tech savvy, early adopting people than the general population, but capturing that audience is how tech markets are won. If this is the case, it would make our data more relevant as a leading indicator, not less.

      Also, as our user base has grown larger over the years, it must be moving closer to the general population. If the general population used Microsoft products more than our niche, then you’d expect to see their numbers on the rise in our data. In fact, the exact opposite is true. As our sample gets larger, Microsoft accounts for less and less of the market, so the trend may actually be even more pronounced than what is shown here.

  2. Volomike says:

    So how do OpenOffice stats stack up against this? I’m curious why you didn’t add those in. Many people I talk to are using OpenOffice now, from relatives to business people I work with. They just can’t stand MS Office because of the pricing and because of the new look of how it works. People like the old MS Office way of doing menus and windows.

  3. David says:

    People probably also spend more time in outlook cause it is so darn slow! With any decent volume of email outlook crawls to a slow. I use to sit around and wait for things to load in outlook all the time.

  4. I love RT, no question. But it’s not installed on most computers, and it’s probably not installed on 99% of computers used for business. I submit that you’re working off a biased sample, and it’d be interested to normalize the data against the population as a whole.

  5. Charlie says:

    Your data isn’t a random sample of computer users. It consists of the users of your product. How representative is your data set of a typical office worker in a large corporation, which is Microsoft’s target market? Your data most likely under represents these users drastically and over represents web based users. Without a good randomized sample, you can’t accurately extrapolate what you are suggesting in your headline. Nice plug for your product, though.

  6. Kevin says:

    Wasn’t it Hotmail that proved you could do email in the cloud for free something like a decade ago?

    • Duncan Lock says:

      Yes, Hotmail were the company that pioneered web based email for the masses and the first to become popular – that’s probably why Microsoft bought them.

    • Dave Lane says:

      I seem to remember that a company called Four11 or something like that preceded Hotmail by quite a bit. It later morphed into Rocketmail, and was subsequently bought by Yahoo! and became their mail system… I think Hotmail was an also-ran.

  7. Brandon says:

    Did people give you permission to use our data like this? Also, your product is used by a tiny “Lifehacker” part of the population. I’m surprised the more expensive Microsoft products are represented at all.

    I’m disappointed you did this. Traffic down?

    • Montana Low says:

      Privacy is always one of our top considerations when dealing with people’s data. You can read our policy here: http://www.rescuetime.com/privacy

      Our customer base has been growing at a pretty brisk clip recently, as more and more people realize how powerful this sort of information is. For instance, one university with 15,000 computers on campus, wanted to know if the expensive software they license for every single machine is being used at all, and if it is, which labs/departments really need it. This gives them the ability to make huge IT budget cuts, without reducing the services they provide to users.

  8. Greg Hills says:

    One other factor. Excel 2007 is a bad joke. I’m using it but I’m not liking it. How MS could completely wreck the UI on a great piece of software boggles my mind.

  9. [...] versión web de su suite ofimática para no seguir perdiendo terreno y en la que, de acuerdo a un estudio de RecueTime, una compañía que se encarga de medir el tiempo y atención que dedican los [...]

  10. [...] acuerdo a un estudio realizado por RecueTime,  se ve que cada vez más usuarios utilizan Google Docs en tanto el tiempo dedicado a la suite [...]

  11. Intosh says:

    100% of employees, yes everyone, in our offices use Outlook. 100% daily reach, sir. I guess your data is already out-of-date then?!

    • Nicolas says:

      Most enterprises have firewall and security concern, plus the desktop is bundled with standard app that the average user don’t bother (and ofen can’t) change.

      That the target audience of MS Office : big companies with thousand of users. And most of theses user will not be on your stats.

      No, you are likely to have people using their personnal computer (as opposite as for office use), or very small enterprises.

      I tryed many office suite and all. Il you need to do advenced task (in my case complex charts), MS Office still rules. It’s funny to see how Excel 2003 can do more thing than the latest Open Office, Number or Google docs version.

    • Andre says:

      An 100% of our employees (over 200) in our offices do not use Outlook. Yes, 0% reach for Outlook. Still, I would never extrapolate from our data like you do.

    • Chris says:

      I think usage in your office is a far more limited than the stats RT has gathered. Our office is almost exactly opposite, everyone bar 1 (the boss) is using GMail, who uses outlook. However thats a much smaller data sample than the article has gathered, so nowhere near as useful.

  12. orcmid says:

    I don’t understand how Hotmail is excluded from this analysis, since it is a long-standing Microsoft property and is also integrated with Windows Live Mail and with Outlook.

    Are you saying that there is no reach for Hotmail or that you are not looking?

  13. Jamie says:

    You don’t even disclose how many users are in your study or where they are located or how many have office or dont OR if they are using a free Gmail personal account while at work. If you throw in Yahoo or Hotmail, you’ll see similar stuff.

    Are you going on record as saying 50% of all RT customers use Gmail as their primary mail solution? That’s what your chart shows.

  14. Fascinating analysis. How are Microsoft going to cope with this?

  15. You say you have been tracking thousands of users? The large research companies have been tracking thousands of companies and millions of users. To date, no one has come up with anything close to this.

    The reality is that your research is flawed because the sample pool is biased and too small to reflect the usage if over 1billion users. And, with a market share of over 95%, those Google bites would be very very small indeed.

  16. Sean Rainer says:

    Rescue time seems to be an app that users install to track their computer usage to keep them on task….interesting analysis.

  17. mojaam says:

    Many have legit concerns about the sample and what not, but what is RescueTime gaining by being biased? Unless google is paying them which most like they are not.

    As far as I can see, this is one of the only ways to get this kind of data unless Google report honest numbers about the amount of users they have and how much time they spend on Google apps. I don’t even know how you can accurately track Microsoft’s applications. Perhaps you can gauge the number of users by sales but then there’s piracy to consider. And there’s no way to track the time users spent on an offline application anyway, well besides RT and a few others services like it.

    I’m one of those time tracking junkies and so I also have another software installed on all my machines that track the apps I use. It’s called wakoopa and if you search for Outlook and Gmail there, you get 24,433 outlook users and 36,857 gmail users there as well.

    Thanks RT for this report, while I like analyzing my own data, I always wish I can compare it with others. Right now, all we have is an “efficiency summary” that compares your productivity to the average user. I want more. I wish there was more. Keep up the good work! If I was a CIO at a company, school or some organization, using RT can definitely help in many ways.

  18. Babur says:

    There are couple of other factors which skews your results shown in this article.

    First, I haven’t met a single ‘corporate’ customer who trust Google’s “Cloud” based office productivity solution (frankly their case hasn’t been helped by recent revelation that Google has been secretly snooping data including passwords etc. if they can do it to a normal user …… the possibilities are just endless).

    Secondly, the level of quality solution provided by MS Office is unmatched so far, not to mention that I have Open Office running parallel with MS Office, but its just there out of curiosity nothing more.

  19. martin1 says:

    crazy world, i’m mad