How Do Google, Microsoft Clouds Stack Up?

It was just three years ago that Microsoft CEO Steve Ballmer got on stage before thousands of IT professionals at Gartner Symposium, derisively downplaying the threat represented by Google's strategy to offer Microsoft Office-like applications in a Web browser. At the time, Google was offering the applications for free, and Ballmer cajoled the attendees with the cliché that you get what you pay for.

But now, with more than 25 million people from over 2 million companies using the free ("standard") or paid ("enterprise") versions of Google Apps, the threat appears very real, and Microsoft is responding with a different sort of rhetoric. Saying that Google's offering is "confusing" and referring to his company's upcoming cloud offerings -- including a suite of Web-based versions of Word, Excel, and PowerPoint -- Microsoft Office Business Productivity Group senior VP Kurt DelBene claimed that the Redmond-based company was poised to beat Google in the cloud. Microsoft has long cited the inability of Google Apps to properly import and display Microsoft documents in "full fidelity."

For example, when it came to documents that include commonly used formatting controls like tab stops, Google Documents couldn't quite present them in a browser. In an interview with me, DelBene said Microsoft plans to offer "full-fidelity" viewing and editing from within a browser. It was sort of a "Hey, Google, put that in your pipe and smoke it" jab that, unbeknownst to DelBene at the time of the interview, Google put in its pipe and smoked.

In the new Google Apps, Google has ameliorated the fidelity issue with an improved import/export capability that allows complicated documents to interoperate between Office and Google Docs without loss of fidelity. And, in testing of a randomly selected document that's shared weekly by a large group of InformationWeek staffers, it was the Web version of Excel (the technical preview "beta" version) that bombed on the import of an Excel spreadsheet, while the old version of Google Spreadsheets managed it with aplomb.

For the latest Desktop Apps news, opinion, and conversation, be sure to check out InformationWeek's Special Report: Desktop Apps: Time For Change

While the test was neither rigorous nor projectable, it cuts to the chase of how much reality there is to Microsoft's rhetoric as it looks to dissuade customers from experimenting, let alone adopting, Google Apps for any or all of what it can do. Based on the following analysis of the two companies' cloud offerings, DelBene's comment about Google's offerings being "confusing" comes across as being a pot calling the kettle black.

For starters, Google Apps comes in two flavors. One, Google App Standard Edition, is free, includes no support from Google, lacks a few bells and whistles found in the paid edition, and users of it must endure online ads. The other, Google Apps Premier Edition, costs $50 per year, is free of ads, includes frills like built-in support for RIM's BlackBerry Enterprise Server, comes with significantly more storage per user than the standard edition, and includes technical support from Google. Both editions include access to a domain-specific version of Gmail (e.g.: your_email_address@your_domain.com); group calendaring; read, write, and edit access to word processing, spreadsheet, and presentation documents; and an ability called "Sites" for setting up Web sites that can make it easier for workgroups to aggregate and subsequently find everything that's associated with a particular collaborative effort. (Microsoft's SharePoint server also does this).

With the new version of Google Apps, document collaboration happens in real time. If you're sharing a document with someone else, they can not only see what you're typing in real time, they get an indication of where your cursor is positioned in the document (and you can see theirs). IM-style chat is both available and integrated into documents. Video and voice communications are available to Google Apps users, but not contextually integrated the way they're found in Microsoft Office when Microsoft's Office Communications Server is in place.

There are of course more details, but those are the tops of the waves.

Going with Microsoft in the cloud is a bit more complicated. (Confusing? You be the judge.)

With Microsoft, there aren't two versions of the same thing, one paid, one not. For consumers and really small businesses willing to turn to ad-supported services like Hotmail for e-mail and SkyDrive for storage, Microsoft will be adding ad-supported Web applications that can work with Word, Excel, and PowerPoint documents. As of the time this was written, the technical preview (a "beta" version) of the Web Apps was available, but the Web-based Excel was the only fully functional application. PowerPoint was available, but only for viewing presentations, and Word was deactivated.

For your company to use the browser-based version of Microsoft Office, you must pay for a SharePoint 2010 server. There are three primary ways of doing this. The first is to self-host SharePoint 2010 on premises. In this case, you're the one running the hardware and the software and taking care of delivery of all of SharePoint services to your users.

The second is for someone else to host your SharePoint 2010 server. There are many third-party hosting services that would be happy to do this for you, and one of them is Microsoft. One way Microsoft can host your SharePoint server is as a part of a suite servers that it hosts for you, called the Business Productivity Online Suite, Dedicated Edition. BPOS-D includes Exchange, SharePoint, and Office Communications Server. The "D" for dedicated means that Microsoft will run this suite on your behalf on a server in its data center that's dedicated to your organization. Technically, this is more a hosting service than it is cloud (but this is splitting hairs to some). According to DelBene, BPOS-D is really for very large customers (some small ones take it, too), and the price is negotiated. Since the 2010 version of SharePoint is due to ship in May, Microsoft should be able to offer BPOS-D "2010" at roughly the same time.

The third way to access SharePoint is through the standard edition of BPOS. "BPOS-S," as some call it, is really what Microsoft means when it talks about what it's doing in the cloud. What's not clear in all the rhetoric is that the version of BPOS-S that will include SharePoint 2010's ability to deliver the browser-based applications isn't due for release until the end of 2010. That's because of how much longer it will take Microsoft to bake multitenancy into SharePoint in order to support a truly cloud-based version. What that means is that for the time being, the only real cloud offering from Microsoft for businesses is the version of BPOS-S that's based on the 2007 versions of the servers -- the ones that don't include the browser-based versions of Word, Excel, and PowerPoint. Today, BPOS-S is available for $120 per user per year.

But wait, there's more.

In order to really take advantage of the document collaboration capabilities in BPOS-S, you still need the software for creating, viewing, and editing the documents: Microsoft Office. This of course comes at an additional cost, one that typically varies from $250 to $500 based on how an organization acquires Microsoft Office (via "business retail" or through a volume licensing arrangement). Here at TechWeb, under our current Microsoft Select level, we pay around $280 per copy. The point is that when comparing what Google is offering to what Microsoft is offering, Google Apps costs $50 per user per year. Microsoft's BPOS-S starts at $120 per user per year, and that's before any per-user costs incurred for Office.

Although it's still early (pricing could change), with one small exception, this "model" -- where Microsoft Office is essentially a prerequisite to leveraging SharePoint -- will remain unchanged. In other words, even though SharePoint 2010 (regardless of how you get to it -- on premises, hosted, or through Microsoft's cloud at the end of the year) is capable of delivering the browser-based versions of Word, Excel, and PowerPoint, users can't legally access those browser-based versions unless they also have a license to use Microsoft Office 2010. (Sorry, prior versions of Microsoft Office don't qualify).

For the latest Desktop Apps news, opinion, and conversation, be sure to check out InformationWeek's Special Report: Desktop Apps: Time For Change

This means that in the Microsoft world, there really is no soup-to-nuts cloud pure play where, for certain users, organizations can provision the browser-based versions of the applications instead of the desktop version. To get the browser version, each user must also have the desktop version (which comes at some additional cost beyond the $120 per user).

There is one exception to this, what Microsoft calls the Deskless Worker Suite. With this suite, users can use crippled versions of the browser-based applications to view documents that are stored on a SharePoint server. "Deskless workers" won't be able create or edit documents. Microsoft will offer this type of access to BPOS-S at a reduced cost of $3 per month ($36 per year).

So which one is more confusing? Google's? Or Microsoft's?

Finally, what does this mean to you? Well, just because it looks more expensive to get the whole enchilada from Microsoft doesn't mean it has to be that way. Based on everything we're hearing here at InformationWeek, Microsoft is quickly gaining a reputation for flexibility on pricing once the word "Google" enters the conversation.