Is there a market left for home/SoHo-orientated pay-for software when Google has an offering like this? Yes, of course, and Apple is showing the way forward with its iWork package, reputed to be enhanced with a new spreadsheet in the forthcoming iWork 07 release. Users don’t want blank sheets of paper – they want ready-made design ideas into which they can drag and drop their content. There’s a richness you’ll always be able to offer on a local-running application that won’t be possible on a hosted service. And it’s that richness the vendors have been pursuing. So don’t expect the pay-for low-end software market to curl up and die.
Instead, think of it as a new tier of low-end cheap and cheerful software that offers a targeted set of features to an important group of users. If there’s one market that should be quaking in its boots, it’s the open-source office development world. They’ve failed to ignite the marketplace in the rich hand-holding environment, and haven’t cracked the high-end Office space either. Their one saving grace was a price tag of nil. With Google Docs & Spreadsheets, that pricing advantage has gone, and many users who might have been drawn to an OpenOffice solution might now find that the Google offering does what they need most of the time, and brings useful and unique capabilities to the table too. As always in this business, don’t come up with a better answer. Redefine the question.