With its new cloud-based suite, Microsoft is striking back at Google Apps. But consider these shortcomings in key areas.
Microsoft CEO Steve Ballmer formally introduced Office 365 on Tuesday at an event in New York City. The service is a rebranded, upgraded version of the company's Business Productivity Online Standard suite that adds Office Web Apps and other cloud services.
With new collaboration tools like Lync and SharePoint Online, and Web-based versions of staples like Word, Excel, and PowerPoint, Office 365 should give Google a run in the market for productivity tools that live in the cloud. Still, some omissions and weaknesses could hamper its take-up in the enterprise market. Here's what's missing.
1. Fully functional Web apps. Despite Microsoft's marketing pitch, Office 365 isn't really "Office In The Cloud." Not entirely, anyway. The cloud-based versions of Word, Excel, and PowerPoint offer only a subset of the functionality of their desktop versions. For instance, the Office Web Apps version of PowerPoint doesn’t have the high-performance video editing tools found in the desktop version, and OWA Word is good for only "light editing," according to Microsoft.
This limited functionality is, of course, by design. With the client version of Office still accounting for about one-third of annual revenue, Microsoft has a strong incentive to keep users on the desktop for the full Office experience. The company notes that Office Web Apps are great for viewing, storing, and sharing documents. But given the numerous online storage products already available for free or at very low cost, many organizations may conclude that the setup hassles for Office 365 won't be worth it unless the software is fully functional.
Office 365 Vs. Google Apps: Top 10 Enterprise Concerns
(click image for larger view and forslideshow)
2. Pricing flexibility. Subscription-based software is like the rent-to-own furniture business: It's great for customers who don't want to spend a lot of money up front, but from an economic standpoint, renting can be a lousy decision. The full-on enterprise edition of Office 365 is priced at $27 per user, per month. That's $324 per year, every year. An outright purchase of Office Professional requires a one-time payment of $499 (less volume discounts), about 18 months worth of Office 365, and it's yours forever. Microsoft would note that the Office 365 subscription includes collaboration tools, support, and access to the latest upgrades. But for many organizations, the math may still not work. Microsoft needs to offer a basic version of Office 365 available for a one-off payment for businesses that don't need the high-level support and ongoing updates.
3. Backwards compatibility. Isn't cloud computing supposed to remove the headaches of constantly maintaining and upgrading software on the desktop? Then why does Office 365 require users to have new or almost new versions of Windows and other products running locally in order to access the online suite? The oldest version of Windows that will support Office 365 is Windows XP, Service Pack 3. Mac users will need at least OS X 10.5 or later. For Web access, users will need Internet Explorer 7 or later. On Macs, only Safari 3 or later will do. Also note that Office 365 doesn’t support Outlook 2003 or earlier versions. Again, it gets back to the fact that Microsoft, unlike Google, isn't fully committed to the cloud because it still depends on desktop and server products for the bulk of its revenue. That means it will need its customers to upgrade—constantly. Until that reality changes, Microsoft's cloud offerings, including Office 365, will have that "neither fish-nor-fowl" aspect about them.
4. Enterprise-class support and uptime. If Office 365 is to succeed, it needs to offer a more dependable experience than what BPOS users received. BPOS was Microsoft's first cloud-based office platform, and it showed. The service suffered from frequent interruptions, and support could be spotty. Just last month, the BPOS email service was hit with disruptions and admins were left in the dark as their service dashboards also went offline. Some users have also complained about subpar and hard-to-reach technical support arising from the fact that some BPOS helpdesk functions were outsourced to India.
For Office 365, Microsoft is adopting a multitenant service architecture that should solve some of the problems. It's also guaranteeing 99.9% uptime. It has to deliver. CIOs who put their reputations on the line with an Office 365 implementation won't tolerate anything less than rock solid performance.