Targeting price sensitive individuals and students, who are also less attached to legacy software and used to running their lives online, was a logical opening gambit, but Google is making its next move squarely into the mainstream enterprise market with the beta release this week of their Cloud Connect for Microsoft Office.
The technology, originally acquired from DocVerse, bridges the gap between thick local applications and data, and cloud-based software and storage. Cloud Connect is a plug-in for Office 2003, 2007 and 2010 (sorry, no Mac support yet) that allows editing Office documents within the familiar confines of Word or PowerPoint, while automatically syncing them to Google's cloud service. An interesting wrinkle is that once in the cloud, the documents inherit Google's versioning and multi-user editing capabilities, so that several users can simultaneously edit a document, even locally within Office, without stepping on one another's changes. (The technology is quite amazing -- those of you with a CS bent can read the full details of how they pull this off starting with the challenges, the solution and finally the optimizations).
Of course, Microsoft now has similar capabilities with Office 2010 (and Mac Office 2011) with it's ability to save to Windows SkyDrive, but Cloud Connect certainly could drive a wedge between Office users who don't yet have an enterprise collaboration implementation and their Microsoft account rep seeking to sell them on SharePoint of BPOS.
Many could find the hybrid approach coupling Google's strength in online document sharing and collaboration with the familiar standby of Microsoft's Office suite the best of both worlds. The risk for Microsoft is that once documents are in Google's ecosystem, users could find themselves doing more and more of the content creation, editing and sharing online, rendering Office increasingly superfluous.