People have been asking me why Google bought Docverse.

Surely, Google already has the collaboration smarts?  After all, it was Google Docs which made document collaboration mainstream.  And it is Google Wave which is arguably now taking it to the next level.  Google also employs Neil Fraser, and it recently bought Etherpad.

So what does Docverse give them?  And why pay so much?

Its not about getting the people – Docverse is a small team – although additional engineers with domain knowledge are surely nice to have.

What this is about is taking away the reasons for upgrading to Office 2010, and more particularly, Sharepoint 2010.  Any business which takes Sharepoint 2010 is making a commitment to Microsoft technology for the next decade or so, which effectively shuts Google enterprise products out, and might even lead these customers to use IIS etc for their consumer web sites (which would also be bad for Google).

So Google is doing what it can to give businesses reason to stop and think.

In the 6 months ended 31 December 2009, Microsoft’s Business Products Division had revenue of $9.149 billion, and operating income of $5.867 billion.  Office is responsible for around 90% of that.

What would it be worth to Google, if it could put a 5% dent in those figures? 5% of $9 billion is $450 million. 0.5% is $45 million.

Put one way, if the people responsible for just 0.5% of Office purchase decisions look at Google + Docverse and say “hey, we can stick with the version of Office we’ve got; we don’t need to buy Office 2010 and Sharepoint to do real time collaboration”, then the Docverse acquisition has made sense for Google.

But really, its about the larger ecosystems, not just the Office purchase.  An Office purchase is a commitment to Windows on the client, and possibly Windows on the server.  And it has network effects along the supply chain (people you exchange documents with).  So preventing an Office purchase frees up a lot of other spend.

Now, Google needs to prove that with Google you get:

• the ability to keep using your existing Microsoft Office (Docverse’s contribution)
• real-time collaboration (without Office 2010 or Sharepoint 2010)
• web-based editing if/when you need it

Docverse gives Google slick looking Add-Ins for Word, Powerpoint and Excel.

Time is of the essence.  Office 2010 will be launched for businesses on May 12, and available online/retail in June.

The adds-ins are worth a few months head start.  (So maybe it is about the people after all?)

Now Google needs to integrate Docverse in to Google Apps.  Rip/replace of the existing Docverse back-end (and probably much of their Word Add-In, since it sends the whole document every time you save, not just the diffs – something Plutext has had right since the beginning) will take a while.  However, the rip/replace isn’t necessary for a rudimentary integration into Google Docs.  What is critical is to make Docverse’s server-side differencing work on Google scale and interoperate with the Google Docs webapp.  Same  for presentations and slides.

It’ll be interesting to see how quickly this can be done.