Marie's blog: Microsoft's Office 365 Ready to Duel Google Apps

Wednesday, August 17, 2011

Microsoft's Office 365 Ready to Duel Google Apps

Microsoft CEO Steve Ballmer took to a New York City stage June 28 to roll out Office 365. That alone hints at the importance attached to this latest cloud-based effort, which Microsoft hopes will blunt the momentum of Google's work in the cloud-productivity arena.

Ballmer claimed Office 365 will give small- to midsize businesses an "edge" in competing, without the burden of complex on-premises systems. Indeed, most of Microsoft's promotional materials seem angled toward that particular audience segment. That's unsurprising, considering how analysts have been telling me for months that Google Apps' presence is strongest in companies with relatively low headcount.

Certainly the competition between Microsoft and Google has intensified in recent months. Tom Rizzo, senior director of Microsoft Online Services, insisted in a May 17 interview that businesses were trying Google's business-cloud offerings before shifting back into Microsoft's camp. Google executives took exception to Rizzo's assertions, arguing that Google remained the leading choice for businesses interested in cloud-based email and collaboration.

And so it's gone on, for some time. But now there's Office 365: Microsoft Office, SharePoint Online, Exchange Online, and Lync Online unified onto a cloud platform available for between $2 and $27 per user per month. Supposedly, Office 365's backend infrastructure is also tougher and more reliable than its predecessor, BPOS (Business Productivity Online Suite), which had suffered some service outages in recent months. Does that mean it's time for the Google legions in Mountain View to start shaking in their collective boots?

Google certainly seems a little freaked out about it, launching a preemptive PR blitz ahead of Office 365's launch. "Office 365 is built for Microsoft. [Google] Apps is built for choice," Shan Sinha, Google Apps' product manager, wrote in a June 27 posting on the Official Google Enterprise Blog. "Office 365 is optimized for Windows-based PCs and devices, which reduces your flexibility. Our applications are designed to work well on any device, on any operating system."

But according to some analysts, Office 365 isn't poised to conquer the cloud just yet.

"While Office 365 does put Microsoft in mortal combat with Google," Matthew Cain, an analyst with Gartner, wrote in a June 28 email, "it is not really an existential threat for Google since Microsoft is essentially validating the model that Google pioneered with Google Apps."

He added: "I would expect that Office 365 actually heightens interest in Google Apps ... the first ingredient we need for companies to wholly embrace cloud-based personal productivity and collaboration tools is time. Time--and I mean 3-5 years--will prove or disprove the soundness of the model in terms of economics, security, stability and functionality."

Other analysts seemed to concur:

"Microsoft is struggling to show value given that Google is preaching 'free,'" Rob Enderle, principal analyst of the Enderle Group, wrote in a July 27 email. "They need to reeducate their market quickly, but don't see this as a marketing but a product problem, and are playing Google's game as a result."

For the substantial majority of companies, Office 365 likely won't wholly replace desktop-based Office anytime soon. Nonetheless, it's an ever-cloudier IT world out there.