Google Apps vs. Office 365: Microsoft faces competition in the cloud

By Sharon Shapiro*, Chiprang.com Guest Writer Microsoft only entered the cloud computing market a year ago when it introduced Office 365 ...

By Sharon Shapiro*, Chiprang.com Guest Writer

Microsoft only entered the cloud computing market a year ago when it introduced Office 365 in summer 2011, but ever since it has been trying in earnest to compete with the cloud veteran, Google.  But despite Microsoft’s best efforts Google still holds onto a big lead in the cloud.

Google introduced Google Apps as a cloud solution in 2006.  Ever since, Google Apps, which is available for businesses, educational institutions, non-profit organizations, and government agencies has been a leader and an authority in the cloud.

Google’s leadership is particularly unsettling to Microsoft, especially given the 2009 prediction by Gartner Inc. research firm that, by 2012, Microsoft would be outselling Google by a margin of 4-to-1.  So, Microsoft has taken some big steps, such as working to retain customers and lowering prices, in an attempt to close the gap between the two cloud platforms.

The Wall Street Journal reported on one of Microsoft’s most popular competitive efforts, the creation of a “Google Compete” team.  This team is intended to retain current Microsoft customers and persuade them not to have Google Apps setup if that is something they are considering.  The WSJ told the story of Microsoft customer Dominion Enterprises, a Virginia-based business, that fell prey to the compete team.  Microsoft learned that Dominion Enterprises CIO Joe Fuller was looking into switching to Google Apps, so the “Google Compete” team flew him out to the Microsoft headquarters in Washington for a tour, which included a look at the research lab, new technologies, and more.  Although Microsoft put a lot of time and effort into attracting Fuller and persuading him to stay with Microsoft, he ultimately chose to go Google.  Fuller told the WSJ he that thought Google had a cooler product and that he would save 50% with Google, as he would pay $200,000/year instead of $2 million for Microsoft.

But Microsoft isn’t just focusing on retaining its current customers, it’s also working hard to bring in new ones.  In order to do so, Microsoft has made a number of changes in prices, platforms, and commissions.

This spring, Microsoft cut the prices of Office 365 platforms by as much as 20%.  While this cost decrease did bring Office 365 slightly closer to Google Apps, Microsoft is still significantly more expensive.  The most expensive suite of Google Apps is Google Apps for Business, which operates for $50/user/year.  This price includes the entire apps suite and is available for businesses of all kinds and sizes.  The least expensive suite of Office 365 is available only to businesses with fewer than 50 people and runs for $48/user/year. 

However, this price does not include add-ons, some of which are necessary in order for the platform to work properly.  Office 365 platforms for businesses with more than 50 people are priced higher.

When Microsoft lowered its prices, it also added a new platform: Office 365 for Education.  Like Google Apps for Education, this platform is free.  While the addition did add some variety to the Office 365 suite, which was previously available only for businesses, Office 365 still does not compare to Google Apps, which has four different platforms plus one for personal use, in terms of variety of offerings.

Finally, Microsoft has further motivated its resellers to bring in new customers by increasing its commission from 20% to 23%.  Bringing in new customers is important to Microsoft in light of the recent report by Gartner that stated that one-third to one-half of all businesses looking into cloud computing for the first time are choosing a Google Apps migration.

So from where does Google’s big lead in the competition come?  In addition to being a six-year veteran in the cloud, offering more diverse platforms, and having lower prices, Google Apps is also a more cloud-based solution than Office 365.  Google Apps is entirely in the cloud - it does not require any additional hardware or software, it lives within the web browser, and is subscription-based.  This not only lowers IT costs, but also allows users to access their accounts from anywhere on any device.  On the other hand, Office 365 is a hybrid cloud solution, as it requires some additional servers and software as well as installation and patching.  This results in higher IT costs and also limits the mobility of some user data.

Given the mixed success that Microsoft’s competitive efforts have met and the fact that Google still costs less, has more platforms, and a better user experience, Microsoft still has a long way to go as it faces its competition in the cloud.

*About the author: Sharon Shapiro is a staff writer at Cloud Sherpas, a leading cloud service provider that was named the “Google Enterprise 2011 Partner of the Year.” As one of the first Google Enterprise partners, Cloud Sherpas has migrated over one million users across a variety of industries from legacy, on-premise messaging systems to Google Apps, helping organizations adopt cloud computing to innovate and dramatically reduce their IT expenses.

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Chiprang-Blogging, Technology and Lifestyle Blog: Google Apps vs. Office 365: Microsoft faces competition in the cloud
Google Apps vs. Office 365: Microsoft faces competition in the cloud
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