Only a year after Microsoft introduced its hybrid cloud platform, Office 365, it is facing off against Google, the six-year cloud veteran.
As more and more businesses decide to make the move to the cloud, it becomes increasingly clear that Google Apps and Office 365 are two popular solutions. But despite the popularity that both enjoy, Google Apps still has the upper-hand in the market. Launched in 2006, Google Apps is a complete cloud solution available to businesses, schools, governments, and non-profits. Five years after Google Apps made its debut, Microsoft introduced Office 365 in summer 2011 as a hybrid cloud suite for businesses. And one year later Microsoft is already working to play catch-up.
This spring, research firm Gartner Inc. released a report that found that one-half to one-third of all businesses looking into cloud solutions for the first time were choosing to have Google Apps setup over other platforms, such as Office 365. In trying to combat this and other trends, Microsoft decided to make some changes that would enable Office 365 to better compete with Google Apps. For example, Microsoft lowered the price of Office 365, added a new platform, and increased the commission to resellers.
One major difference between Google Apps and Office 365 that was extremely easy to spot was the price of each platform, as Google Apps cost significantly less. However, this spring Microsoft cut the prices of Office 365 platforms by as much as 20%. Despite this effort, Google Apps still costs less than Office 365. The least expensive platform of Office 365, which is only available to businesses with fewer than 50 people, costs $48/user/year, not including the price of any add-ons, many of which are necessary for this platform to be used as intended. On the other hand, Google Apps for Business, which is the most expensive of all the Google Apps suites, costs $50/user/year regardless of how small or large the business is. This price also includes the complete apps suite.
Along with lowering its prices, Microsoft also added a new platform to the hybrid cloud suite, Office 365 for Education. After this addition, Office 365 became available to two audiences: businesses and schools. In contrast, Google Apps has specific platforms available for businesses and schools as well as governments and non-profits. And anyone with a Google account uses the free, personal version of Google Apps. Both Google Apps for Education and Office 365 for Education are free suites.
While lowering prices and adding a platform were intended to attract more customers, Microsoft also added an incentive for its resellers to bring in more users when it increased their commission from 20% to 23%.
In addition to looking to attract new customers, Microsoft is also working hard to retain its existing users. Most recently, Microsoft created a “Google Compete” team to prevent current Microsoft users from undergoing a Google Apps migration. The Wall Street Journal reported the story of this team and its attempt to keep a Virginia-based marketing firm, Dominion Enterprises, a Microsoft customer. According to the WSJ, when Microsoft got wind that Dominion Enterprises was considering switching to Google the compete team invited the company’s CIO, Joe Fuller, to the Microsoft headquarters. While there, Fuller received a tour of the facilities, sneaked a peek at new technologies, visited the research lab, and saw road maps for existing products. However, despite the compete team’s efforts, Fuller still decided to make the switch. He told the WSJ that going Google saved him 50%, as he would pay $200,000/year with Google Apps instead of $2 million, and that, quite simply, Google had a cooler product.
So what makes Google Apps so much cooler than Office 365? The answer lies in the user experience, which is very different on each suite. Google Apps is an entirely cloud based solution as it is a subscription-based service that runs completely within the web browser and does not require additional hardware or software. Because of this, users can access their Google Apps accounts from anywhere on any web-enabled device. Additionally, Google Apps runs on a 99.9% uptime guarantee (including services and updates) that it regularly meets and exceeds. On the other hand, Office 365 is a hybrid cloud solution as it does require some additional servers which necessitate licensing, patching, and upgrading. Some versions of Office 365 also work best with a version of Microsoft Office installed locally on a desktop. The fact that Office 365 is a hybrid solution does limit the mobility that Microsoft users enjoy compared to Google users. Like Google Apps, Office 365 also runs on a 99.9% uptime promise, but Microsoft’s uptime promise does not include planned services and updates. Moreover, Microsoft has had some difficulty meeting its guarantee in the past.
Microsoft’s recent efforts including the price drop, platform addition, commission increase, and “Google Compete” team may be slightly helpful when it comes to retaining current customers and attracting new ones, but they are not enough to help Microsoft truly compete with Google in the cloud.