Google's cloud service, Google Drive, is an obvious challenge to competitor cloud services, such as Dropbox and Microsoft SkyDrive. But Google's thrown gauntlet to Microsoft could be much broader in its implications, targeting the core of Microsoft's business computing model, the Office productivity suite.

At stake is not just the future of one set of business software tools--even one in such universal business use that most IT departments at midsize firms must deal with it. More broadly at stake is the way that we think about business computing and the relationship between individual solutions and the environment in which they operate.

A Core Challenge

According to Rafe Needleman at CNET, Google Drive does not simply enter the lists against competing cloud services, including Microsoft SkyDrive. The Google challenge to Microsoft goes far beyond that, argues Needleman. Google encourages business users to focus not on the specific tools they use to edit their work, but instead on the channels by which they access it whenever and wherever needed.

It is this shift in focus, more than Google's directly competitive productivity tools, such as Google Docs and Google Apps, that threatens the core role of Microsoft Office. Microsoft's prospective loss is Google's gain, but their business models are highly asymmetrical.

Microsoft loses if businesses are not buying its productivity suite. Google gains not so much from Docs and Apps themselves, or even Drive per se, but from gaining a position from which to fuel the flow of business information and respond with targeted advertising. This after all is the heart of Google's business model.

Knowledge and Power

Google can learn the preferences of midsize firms just as it learns the preferences of individual consumers. And each midsize firms is a sizeable market for advertisers. Needleman's argument and Google's suggested objective raise two questions. One is narrowly practical and applies to individual workplace users; the other is a matter of strategy and applies on the level of firms.

The immediate practical question is how committed users are to specific productivity tools. How readily can someone switch from Word to Google Docs? For hard-core power users creating complex documents, the switch may not be easy. But indications so far are that most users are less demanding. They can switch easily if the switch provides more convenient access to their work from multiple locations and devices.

But for IT managers for midsize firms, this raises a strategic question. No matter how smoothly Google integrates Drive with Docs and Apps (and whatever else), how much insight do you really want Google to have into your firm's interests and operations? Concerns about privacy are not just for individuals; they apply to midsize firms as well. The choices involved need to be weighed carefully.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.