Microsoft Corporation (MSFT) seemingly is threatened by Google, Inc. (GOOG) on a monthly basis. Microsoft's history is costly software and related licensing; Google's history is free products supported by an advertising model that works exceedingly well. With the newest release of Microsoft Office due out shortly, has Microsoft kept to its old recipe or is it bringing the fight to Google's doorstep? A little of both.

Google, Inc. (GOOG) has been referenced by more than a handful of journalists in recent years as the company most closely competing with Microsoft Corporation (MSFT). In reality, that's not very true: Google derives almost all of its revenue from internet advertising while Microsoft gets its cash buckets from operating system and productivity software. The lines are blurring, but even in 2010 there are way more closer competitors to Microsoft than Google.

Google Inc.'s (NASDAQ: GOOG) Google Apps project has gained steam (and customers) since its introduction a few years ago. Although it's not yet a true competitor to Microsoft Corporation's (NASDAQ: MSFT) Office juggernaut, it is making headway.

The "software as a service" camp is doing nothing but speeding up, as small and large businesses would like to offload expensive software installations and just use the Internet as a vehicle for getting things done across boundaries and time zones. Microsoft, though, is not capitulating just yet.

Google Inc. (NASDAQ: GOOG) is a true Goliath in the online world, exerting its dominance in search, Web-based e-mail, maps, software, and more. Despite this fact -- or perhaps because of it -- it seems that tech companies can't wait to do battle with Google. IBM (NYSE: IBM) is the latest rival to throw down the gauntlet, with the company launching its own internet-based e-mail service for businesses.

The new service, known as LotusLive iNotes, is geared toward employees who might not be able to access their company e-mail remotely. The no-frills program features basic applications such as messaging, calendar, and contact management. LotusLive iNotes is being offered at prices as low as $3 per user per month. (Google's Google Apps service, with e-mail and Web-based applications including word processing, is priced at $50 per user annually.)

Google (NASDAQ: GOOG) appears to be moving in the direction of having a new product launch every day. Over the weekend it said it would bring out its own internet browser. It also announced the launch of a video-sharing product for businesses.

According to Reuters, "Unlike YouTube, which is aimed at consumers, Google Video for business is designed to be shared among designated users within an organization's own Web domain, protecting executive speeches, product training, sales meetings or other employee video messages from unauthorized disclosure outside the company."

Because Flash video, the most widely used format, can already be put in password protected sections behind a company's firewall, it is hard to see why the new product would have much appeal.

Google has not had much success with its enterprise software. There is little evidence that the Google Apps desktop software is selling well. That may be because the company offers good free versions of the product. Most of Google's other productivity software including GMail, Google Calendar and Google Talk can be used without charge.

One of Wall Street's only criticisms of Google is that its move into enterprise products is not making any money. If that comment is fair, Google just dug itself a deeper hole.

Douglas A. McIntyre is an editor at 247wallst.com.

Google (NASDAQ: GOOG) Apps is a set of server-based word processing, spreadsheet, and presentation software created to go after a number of the features of Microsoft (NASDAQ: MSFT) Windows. While Windows uses the memory of the PC, Google's product runs over the internet on Google's servers.

Microsoft is getting sick of having sand kicked in its face. The big software company said that it would increase "the availability of its online services for e-mail and collaboration software," according to Reuters. The software had been available to smaller businesses but now it can be used by companies of any size.

Google claims that it has signed up 500,000 businesses to use Google Apps. That has to be a real headache for Microsoft.

Now, Redmond is forced to walk a fine line. If it offers too many services over the internet at too low a price, it could cut into its profitable Vista franchise. Most of Microsoft's margins are based on Windows, its server software, and Office. If the margins on those fall, the company's stock price is likely to take a large hit.

The news is another example of how Google is bedeviling the world's largest software company and hitting it where it hurts most, in its large profit centers.

Microsoft's problem may be that it cannot do anything about the problem other than match Google's products and probably drop what it charges. It is an unhappy option.

Douglas A. McIntyre is an editor at 247wallst.com.

Now that Google (NASDAQ: GOOG) has begun to go after Microsoft (NASDAQ: MSFT) Office, International Business Machines (NYSE: IBM) wants a piece of the action as well.

Big Blue will launch a new, free office-like product called Symphony. It will be available on the internet, and it is free.

According to The Wall Street Journal "Symphony is based on software available from Open Office." The same foundation is used for Sun Microsystems (NASDAQ: JAVA) and Google's desktop applications processes. The product also has functions from Notes, a product IBM bought years ago. Notes was almost run out of the market by Microsoft. IBM hopes that the free software application will help it sell more recent versions of Notes, which includes e-mail and instant messaging.

Does the IBM launch matter? Probably not. Nor does the recent upgrade of Google Apps to include software similar to PowerPoint. Microsoft has about 500 million desktop applications running on PCs and the Journal writes the company has "sold 71 million licenses of its latest version of Office in the fiscal year ended June 30." The Office software sells for slightly more than $100.

Getting customers to leave Microsoft, with its huge installed base, is almost impossible.

Douglas A. McIntyre is a partner at 247wallst.com.

• Companies should question the actual number of users Google has "within the enterprise"
• Google's history of releasing "incomplete products, calling them beta software"
• Desktop costs will rise for companies trying to offer both Microsoft Office and Google Apps
  

Capgemini, the largest computer consulting firm in Europe, will begin to market Google (NASDAQ: GOOG) Apps to its corporate customers. It would have been hard for the big search company to get a better endorsement. Capgemini global outsourcing chief executive Paul Spence said, "Incorporating Google Apps Premier Edition into our offering is yet one more way that we are helping our clients adopt technological innovations within a robust and tested framework."

Google Apps has companies' e-mail, spreadsheet, word processing, and presentation software packaged into one bundle. The software operates on PCs with most of the processing being done on Google servers instead of one the PC itself, the way that Microsoft (NASDAQ: MSFT) has done so far.

The move has to be considered as a fairly big blow to Microsoft Office. Since its launch, Google Apps has been characterized as a nice, inexpensive solution for small businesses. It does not appear to have been widely adopted even in that market, but having a large IT consulting firm offering the software could begin to change that perception.

Microsoft, which is beginning to market desktop software that operates on servers to compete with Google, does not need a big boost for Google right now.

Douglas A. McIntyre is a partner at 24/7 Wall St.