Google, Microsoft Jockey For Enterprise Dominance

Microsoft and Google go head-to-head next year over online apps for business.

Mary Hayes Weier, Contributor

August 27, 2009

4 Min Read

An experienced software player that understands enterprise needs, or an innovative Web giant? A hybrid online-offline software model customized to company needs, or a refreshingly hands-free, low-management approach to desktop applications?

These are the choices CIOs face when, in about a year, there will be for the first time two big companies hawking Web-based desktop productivity applications: Microsoft with its upcoming Office Web suite, and Google with its online apps. In recent interviews, executives managing these efforts at both companies explained why they think they'll win the enterprise race.

Microsoft likes to dismiss Google and other online apps as built for consumers. Its Office Web is built foremost for business use, said Ron Markezich, VP of Microsoft Online, citing security-oriented choices such as the ability to host the software in one's own data centers, or on dedicated servers within Microsoft's data centers.

Not necessarily so, says Dave Girouard, president of Google Enterprise. There are two million businesses of all sizes using Google Apps, and the company is "scrambling to keep up with demand," he said. When it comes to the Web, Google was "born of this platform, and everything we've ever built is about the Web," Girouard said.

Google has an ongoing road show aimed at attracting companies to Google Apps; it's hitting Washington D.C., Pittsburgh, and Philadelphia, next week, and expects to have dozens of CIOs at each place, including ones from the largest companies in those cities. When Google talks to CIOs directly, they come away believing that "their data is safer inside Google than inside their own data centers," Girouard said.

Google is planning more cloud offerings in coming months and a greater focus on helping customers collaborate on the Web, Girouard said. That doesn't necessarily mean more products, he said, "but expanding the boundaries of products we have today." Voice, video, and more mobile offerings are all in the plans, Girouard said.

Microsoft says it, too, plans to offer customer more choices, and that could result in more complex contracts. Big companies will likely use Office Web apps as part of an overall desktop strategy that also includes paid-for Office desktop licenses.

A large global company might want to use Office Web for geographic regions with good connectivity, and stick with desktop apps in developing regions with less dependable connectivity or in places where government regulations make cloud computing difficult. Office Web apps won't have all of the functionality of traditional desktop apps -- for example, the online version of PowerPoint won't offer high-performance video editing tools. And deals with big companies in most cases will be part of a larger Microsoft contract. That will require CIOs to work with Microsoft or its partners to decide what makes sense where.

It could be worth the effort: companies using Microsoft's existing Business Productivity Online suite, which includes Web-based versions of Exchange, SharePoint, and Office Communications, are seeing a 10% to 50% savings compared with what they were spending for licensed versions of those apps, he said.

Microsoft plans to use Office Web to get closer to customers and sell them other Microsoft products and services. With Business Productivity Online sales, "the level of connection and partnerships we have with customers is quite a bit higher," Markezich said.

But don't count Google out. Young people are using Google Apps at home or at school, and increasing numbers are entering the workforce more familiar with Google Apps than Microsoft. Google Apps is getting enterprise street cred, too, with big deals, such as for 15,000 users with Genentech and 12,000 with Johnson Diversey.

And by the time Office Web comes out, Google will have had a 3.5-year head start in selling online apps to the enterprise. Microsoft will have to play catch up in an area increasingly dominated by Google.

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