For Microsoft it might just be Internet Explorer versus Netscape all over again. Except this time it’s Office 2016 versus Microsoft’s old nemesis Google and new ‘frienemy’ Dropbox.  What’s up?

Microsoft’s new Office 2016 release sports a host of cool collaboration features, many intended to fend off the latest contenders for market leadership for the computing platform de jour.  For Microsoft, this is merely the next round in the ongoing battle that included the desktop (Windows vs. Macintosh), the office productivity suite (Office vs. WordPerfect, Excel vs. Lotus 1-2-3), and the Internet launch pad (IE vs. Netscape).  This time it’s for the cloud, and the stakes may be even steeper than in the past.

Back in May, at the Ignite Conference, Microsoft CEO Satya Nadella touted Microsoft as “the only company that cares deeply about both individuals and organizations, and bringing them together to achieve transformation.” Office 2016 represents the next step in that journey, and it comes not a moment too soon.  What’s different this time around?

During the Ballmer era, while Microsoft focused on making Windows the dominant operating system, Dropbox was quietly amassing 300M consumer cloud users for its file sync and store service. Concurrently, Google was busy recruiting users for its Google Drive and Google Apps services. Subsequently, both companies parlayed their popularity with consumers to crack the business cloud market.

With Nadella at the helm, Microsoft quickly realized that the operating system is yesterday’s news; today’s business opportunity is the cloud…and Microsoft was very late to the consumer party. Microsoft’s file synch and share offering, SkyDrive (now OneDrive), lagged far behind Dropbox and Google, as well as other competitors.  With just 18.2M consumer users, maybe Microsoft is not the only company who cares about individuals and organizations after all?

And the new contenders aren’t resting on their laurels either, because they realize that winning the cloud represents the opportunity to be tomorrow’s computing platform.  Both companies are extending (or will extend) their offerings to offer additional office productivity capabilities.  Just last week, Google announced a free ‘Google for Work’ upgrade for any user with an enterprise agreement (read ‘Microsoft Office 365’).  Dropbox for now, seems content to partner with Microsoft to allow its users to edit files stored in the Dropbox cloud, but its recent beta release of Paper and its acquisition of office productivity software company CloudOn back in January signals they are likely headed in this direction as well.

So, while starting far behind the pack, Microsoft is doing what Microsoft does best. It is using its strength, namely, the popularity of Word, Excel, and PowerPoint to entice Microsoft ‘defectors’ to return to the Microsoft fold, namely the Office 365 cloud.  Microsoft is banking on its popularity as the productivity suite that consumers and business people like to use; at home and at work. Is it working? It’s too early to tell, but the strategy is certainly rankling a few feathers. Google for one isn’t taking this lying down.  Recently, Google struck a deal with Softwatch, an office suite analytics company, through which users can measure how much they are using, or not using, Microsoft Office.  Google is out to prove that while you might have an emotional attachment to Exchange, Word, Excel, and PowerPoint, leaving them behind won’t cause you that much angst; especially if the price is right (read: free).

Microsoft is also adding new collaboration capabilities to Office 2016 specifically targeted to compete with Dropbox and Google, targeting those individuals who signed up for file storage service at home and now want to take it to work.  Specifically, Microsoft is making it easier to form small collaboration groups with whom to share documents and information.  Notably not part of Office 2016 are significant additions to Microsoft’s enterprise collaboration tool, SharePoint, which organizations rely upon to implement business initiatives like records management, knowledge retention, and client or case management. Seeing no real competition in the enterprise arena, Microsoft is choosing to focus on the massive ‘low-end’ of the market; the prosumers who have opted for alternative cloud services.

Lastly, Microsoft is playing on peoples’ desire to simplify their lives, by using a single set of productivity tools for work and for play. For example, Microsoft has created Outlook for work and Outlook.com for home, ‘Skype for Business’ and Skype for consumers, ‘OneDrive for Business’ and OneDrive for consumers. This part of the strategy has a long way to go. The enterprise and consumer incarnations of these products are common in name only; even superficial use makes it clear the home versions are very different from their enterprise cousins. A lot of this has to do with legacy; Microsoft has simply rebranded a series of technology acquisitions…and it shows.  For this part of the strategy to work, Microsoft has to do a much better job of making the pieces fit together.

Where does it go from here? While Microsoft is currently dominant in the office market, it lags in the consumer file synch and share market and it has a long way to go to catch up. On the other hand, Google has never been able to establish itself in the enterprise market and Dropbox today offers only a small piece of a much larger puzzle. Who will win? If you ask veterans of the Apple Macintosh, Netscape, or WordPerfect wars, they will surely tell you not to count Microsoft out just yet.