Storm Clouds Develop Between Microsoft and Google Apps
July 16, 2012

Storm Clouds Develop Between Microsoft And Google Apps

Enid Burns for — Your Universe Online

Microsoft is throwing more emphasis on its cloud-based apps service Office 365, in an effort to gain more customers away from Google's competing app platform, the Wall Street Journal reports .

Redmond-based Microsoft is realizing that while it needs to continue to support its software-based Office Suite, the company needs to strengthen its cloud-based offering as well if it wants to stay competitive. The company is expected to make announcements about new versions and features for its Office 365 offering later today at a press event.

In the meantime, Microsoft's efforts to edge out Google have been largely promotional. Microsoft reportedly cut prices for its enterprise business solutions, and also increased the commissions it gives to resellers. Microsoft has also offered incentives for resellers, and perks that extend to prospective clients during the sales process. Some of these efforts are part of the force of Microsoft's new "Google Compete" team, a group at Microsoft that operates under the mission to keep Office customers from moving to Google Apps.

One customer, Dominion Enterprises of Norfolk, Va., was invited to visit Microsoft's Redmond campus, tour the facilities, and learn about products and services on the company roadmap. Dominion Enterprises' chief information officer Joe Fuller visited Microsoft for two days in June. Dominion ultimately signed a contract with Google. CNET reports that Dominion was paying up to $2 million a year, and now pays $200,000 for Google Apps.

Google Apps includes Docs, Google Drive, business email, calendars and other collaborative services. Microsoft Office 365 offers email, shared calendars, anti-spam filtering, directory synchronization, Office suite, SharePoint intranet, IT support and a handful of other services. Depending on the particular plan, Microsoft's Office 365 runs from $4 to $20 per user, per month, however sales staff might be able to work out better rates or bundle extra services. A breakdown on the Google Apps suite was not immediately available on the site, however The Wall Street Journal reports that enterprise companies pay $50 per user per year for Google Apps services. Some companies may work out deals for lower.

Dominion Enterprises' move from Microsoft Office 365 to Google Apps may be part of a trend. A Gartner report released in May says Google is winning one-third to half of new corporate users paying for web-based software, as stated in The Wall Street Journal article. This finding goes against forecasts from 2009 when Gartner believed Microsoft would be outselling Google Apps by roughly 4-to-1 at this point.

Slower growth for Microsoft could hurt the company, as new competitors enter the space. "All of a sudden this looks really serious," Gartner analyst Tom Austin was quoted saying in The Wall Street Journal article. "By all accounts, [Microsoft] should be burying Google, and they're not."

Microsoft has confidence in its efforts to improve Office 365, and increase visibility through a strong sales pitch. "It's a long race, and we feel good about the products we're delivering," said Microsoft spokesman Frank Shaw, in The Wall Street Journal. "We take all competition seriously."