Google Buys Maker of Online Document Editing Software

Writely users can upload Microsoft (Nasdaq: MSFT) Word, OpenOffice, RTF, HTML or text documents, or create a document from scratch. A WYSIWYG editor formats and spell-checks the documents online. The software is currently in beta.

Upstartle, a three-person software development firm, launched the program in August 2005. Writely has closed off new registrations until it moves the application to Google's software architecture. The site will continue operating for current registered users.

"Writely is like a caterpillar that we hope to make into a beautiful butterfly at Google," Writely developer Claudia Carpenter said. "We love Google's philosophy and values."

Focus on the User

Google's acquisition of Writely is consistent with its rumored GDrive strategy, a service that would provide users a universally accessible network share that spans across computers, operating systems and other devices.

Like GDrive, analysts are not sure how Google would immediately monetize its newly acquired Web word processor. Then again, Google's team may not have figured it out yet, either, said Kelsey Group analyst Greg Sterling.

"Google takes a consumer-centric view of the market and then, as a secondary matter, tries to figure out how it is going to make money," Sterling told TechNewsWorld.

History Repeats Itself

If history is any measure, Google will be wildly successful monetizing Writely. The company initially approached the search segment in the same way -- by creating a useful tool first and then finding a way to make money. The result was the concept of paid search.

"There is pressure on Google to diversify its revenue sources. I think the company is feeling that pressure more than it thought it would," Sterling said, noting that Google will ultimately be able to monetize Writely through maintenance of market share or other strategies that have yet to emerge.

"Acquiring Writely is probably a good move in the sense that Google will no doubt grow an audience that likes its tool and probably will be able to save material with Google itself. Doesn't help with searching, but it does help with locking people in," Danny Sullivan, Editor-in-Chief, Search Engine Watch, told TechNewsWorld.

Head-On Collision

In some ways, Google has taken a page from Microsoft's success story. If consumers use Google word processing, Google e-mail, Google search and other Google tools, it could reinforce the use of the entire collection of applications in much the same way as consumers rely on Microsoft's integrated ecosystem.

"This acquisition marks a more open declaration that Google is moving into a confrontation with Microsoft around some of the tools and applications that Microsoft has owned, word processing being the most mainstream beyond the operating system on the desktop," Sterling said. "It does now seem that Google has undeniably started down a path that puts it on a collision course with Microsoft."