Google versus 37signals

On one side of the internet is Basecamp, a web-based collaboration tool by 37signals, which serves as a focal point for project specific task, messaging, scheduling, and file management. It is every program manager’s dream. And those open-minded enough to use it, quickly realize that it works. It just works.

And on the other side of the ring internet is Google Docs, and soon, Google Wave. Google Docs is a robust web-based document management system that includes word processors, spreadsheets, slideshows, and forms. Each of these features offer flexible real-time file sharing and inline editing with background chatter.

Google if you haven’t heard about Google Wave yet, well, please take a moment to get with the program:

So is Google taking aim at 37signals? Absolutely not. Instead, both companies saw a demand—web-based file sharing and collaboration—that wasn’t being met elsewhere, and mobilized to fulfill it. The difference here is business models of the two companies. Basecamp is a premium service, with plans ranging from $24 to $149 per month (as of 6 July). Docs and Wave are, well, free.

Despite Google’s “Don’t be evil” mantra, 37signals’s Basecamp may be done for. Not only is Wave free, its tie-in with the entire Google suite also makes it a better product. Wave works seamlessly with Blogger, and is by its nature of a innovative mix of Google’s Gmail, Gchat, Picasa, Maps, Orkut, and Docs. Moreover, Wave’s soon-to-be open-source API allows  developers to add what promises to be a ton of third-party content in the near future. (Though 37signal’s makes Basecamp’s API available, I doubt it”ll  see the same level of interest as Google’s product.)

Despite all the research and development, Google can get away with offering Wave as a free product because of the company’s holistic business model. A recent WIRED magazine article, “Secret of Googlenomics: Data-Fueled Recipe Brews Profitability“, explored Google’s unique business model and the economists who fine tune that model each day:

Googlenomics actually comes in two flavors: macro and micro. The macroeconomic side involves some of the company’s seemingly altruistic behavior, which often baffles observers. Why does Google give away products like its browser, its apps, and the Android operating system for mobile phones? Anything that increases Internet use ultimately enriches Google, [Google's chief economist Hal Varian] says. And since using the Web without using Google is like dining at In-N-Out without ordering a hamburger, more eyeballs on the Web lead inexorably to more ad sales for Google.

How can 37signals counter this? Well, fortunately for them, not CIO everyone buys into the Google platform. For example, despite the efforts of the Google Business Solutions team to become a one-stop-shop for consumer’s web-based needs, the company has somewhat struggled to gain a firm foothold in the business world. Take Google’ Gmail, for instance. Despite being an arguably superior product, Gmail is still outpaced by e-mail platforms like Microsoft’s Outlook and IBM’s Lotus Notes. And I image only the most progressive and nimble companies–mostly small companies–have embraced Gmail and Docs for their business needs.

Moreover, Google’s past success may be its own downfall. In it’s quest to catalog everything on the internet, Google’s activity has spawned numerous conspiracy theories about the data the company collects on its users and their activity. Ironically, 37signal’s best attribute is that it isn’t Google.

Still, I look forward to both Google Wave’s acceptance in the community, and the 37signals reaction. I can’t help but wonder if Basecamp has a future in an internet that will soon give birth to Google Wave.