Microsoft Readies Office 365 as Google Preps for Battle

Microsoft is readying the launch of Office 365, an online
productivity platform that serves as the company’s next big bet on the cloud.

Microsoft CEO Steve Ballmer is expected to headline the June
28 event at New York City’s Skylight Soho, the same venue that hosted the
Windows 7 launch in October 2009.

Office 365 links together Microsoft Office, SharePoint
Online, Exchange Online and Lync Online for a starting price of $6 per user per
month. On top of that, Microsoft is also offering an Office 365 Marketplace
with productivity apps and professional services. June’s public beta of Office
365 followed a limited beta launched in October 2010.

In essence, Office 365 is a rebranding of the company’s BPOS
(Business Productivity Online Suite), which bundled products such as SharePoint
Online. Microsoft hopes that Office’s built-in cachet will draw more users to
embrace a cloud service, arguing that companies will save the money and
headaches associated with maintaining on-premises servers and other IT
infrastructure. The subscription model also ensures Microsoft a steady stream
of month-over-month revenue.

In order to seize that revenue, however, Microsoft will need
to face down Google, which has devoted similarly enormous resources to
developing and deploying its own cloud-based offerings for businesses and
consumers. Indeed, on the eve of Office 365’s launch, Google launched a minor
public-relations offensive designed to position its Google Apps as the better
choice in cloud-based productivity software. 

“Office 365 is built for Microsoft. 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.”

Over the past few months, the animosity between Google and
Microsoft has descended to an ever-deeper depth. Google even sued the federal
government after the Department of the Interior allegedly denied its bid to
update an email and messaging system—a $59 million, five-year contract that had
gone to Microsoft’s BPOS-Federal suite.

Traditional desktop-bound Office certainly dominates the
vast majority of business environments. Near the end of 2010, research firm
Gartner asked some 204 IT pros about their businesses’ productivity software,
then used that data in a research note that estimated, in part, the Office
install base. Office 2003 and 2007 dominated that list, with a respective 33
percent and 41 percent share, while Office 2010 followed behind with 24

“The survey was taken at the Gartner Symposium in October,
so respondents are not representative of smaller organizations, where we
believe Google Apps is more popular,” Gartner analyst Michael Silver told eWEEK
May 18. “Less than 1 percent are using Google Docs now and about 2 percent will
be using it by [year-end 2011]. Moreover, most organizations are still using it
in addition to Office and not to replace all their Microsoft Office licenses.”

Whatever its market share,
Google will fight to hold it as Microsoft rolls out Office 365. “You can’t just
take legacy, desktop software, move some of it to a data center and call it
‘cloud,’” Sinha added in that blog posting. “Apps was born for the Web and
we’ve been serving hundreds of millions of users for years.”

Trust that Microsoft will make an equally aggressive case
for its own offering.

Follow Nicholas Kolakowski on Twitter


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