After more than eight months of hype Microsoft's cloud-based productivity suite, Office 365, formally went live Tuesday with Microsoft launch events from New York and around the world. Google Apps has proclaimed a premature victory, but as we all know price isn't everything - both Office365 and Google Apps will be winners.
Google reacted with 365 reasons to consider Google Apps on the Official Google Enterprise Blog. Frankly I thought that it was an immature response; perhaps it just illustrates that if you're not using a competitor's product in earnest then you'd better be careful what you say it cannot do. The fact that in the post Google could only come up with 4 reasons, and those were barely credible, made for poor PR.
A lot of fluff, and unnecessary. Both Google and Microsoft will benefit from the launch of Office365, for the following reasons.
1. Office365 raises the whole perception of the cloud to new level of trusted service
Sure, we've had cloud now for a while, and we know about Dropbox and various very useful ancilliary services we use daily in the cloud. And we've had Google Apps for a good while. But let's get real, Google Apps is still struggling - it's doing OK but not making much money for anyone. See for example that Keboko Ltd in the UK, a cloud evangelist and Googe Apps reseller just folded - not due to no sales but to the long tail of the 20% margin taking far longer to kick in than the business could support. That is, cloud has been feasible, but hard to achieve and harder to sustain for resellers.
Office365 brings cloud to everyone's desktop, in a familiar and virtually transparent mode. AND, it runs "off-shore" for Australians - out of Microsoft's data centre in Singapore. In one fell swoop that takes a lot of the heat out of the "offshore" argument - because actually no-one really cares and it becomes a non-argument - it just reverts to a sales trick but with far less momentum. And on this count of non-local computing Office365 and Google Apps help each other.
Google Apps will benefit from the realignment of the general acceptance of cloud computing for the everday desktop. Office365 will improve the achievability of Google Apps partners surviving!
2. Google pricing will help people understand the value of Office365
Google Apps are know for their "low cost" - US$50 year per user (Google Apps for Business). Office365 comes in with a lowest price of US$72 per user per year (although Australian users pay up to 76% more than US users; Australia pricing from Telstra). That's more for Office, for sure, although when you do the total cost of ownership sums (as Google encourages you to do) then any current Microsoft user will start avoiding a whole series of other support and operational and licensing fees.
On the basis of getting rid of infrastructure Google Apps and Office365 will come out square, except that with Office365 you'll be able to do it on a phased transparent basis, as against a big-bang basis with Google Apps. If we're getting serious here, we'd have to add in the cost of retraining to Google Apps. That's a sum which is going to far far exceed the $22 savings for the first year of Google Apps.
And if we're getting serious we have to also say that Office365's collaboration and communication capabilities are a world apart from Google Apps. No-one, except the Official Google Enterprise Blog, is going to claim that anything offered by Google Apps matches up to Exchange, Sharepoint, and Lync (the old communication server). Lync itself is an under-rated component of the Office365 offer - the unsung hero as PC World puts it, and off course Skype fits in there somewhere.
There is huge value in that extra $22 charged by Office365. Contrary to popular belief, I expect that this small difference, for such a large value-increment, is going to put a lot of pressure on Google Apps.
3. Office365 will accelerate the restructuring of the channel, helping Google Apps
Office365 proclaims that "cloud" is here to stay. Microsoft CEO Steve Balmer proclaimed Office365 is where Office meets the cloud. Up until now the cloud - as it is thought of by business - has been a bit foggy, and that also applies to the channel and resellers, where discontent has been running high.
From now on, If you’re not asking yourself if the cloud is right for your company, your CFO, CIO, or other another executive, or a competitor, will. Office365 is going to catalyse those questions, raise their profile, and accelerate change. It's a key strategic leg for Microsoft, and they will make sure it is on every business agenda possible.
This means that Microsoft will also have to sort out their relationships with their hundreds of thousands of service-provider partners. They have been working on that for years now, and through BPOS learnt some tough lessons. They are actually far more advanced in tackling this very tough problem than any other vendor, in my opinion. Compare Google's partner and channel experience to Microsoft's - it doesn't compare - Google's doesn't even rate on that scale.
But as Microsoft get on top of this, and as the channel adjusts and restructures, Google will be able to leverage the enormous effort put in by Microsoft to create its own advantage. There are no doubt new channel opportunities for cloud services - it's about how to reinvent the channel not replace it, and to avoid the business dangers.
At the end of the day, I think that Office365 is good for everyone - for business, for users, for cloud, for Google, for the channel, for consultants, and for the future of IT. Whether the ultimate "winner" will be the total off-premise Google model, or the combo on-premise off-premise model of Microsoft I don't know. Although I do feel for now that the combo cloud plus on-premise vendors are best placed for the SMB SaaS opportunity.
What's your view of Office365 and the Google Apps war? - please leave your comment in the box below.
PS I'm mostly a Google Apps user, but I still use Office regularly.
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