News Stay informed about the latest enterprise technology news and product updates.

Microsoft counters Google Apps with Office 365

Checkmate! Microsoft hopes its Office 365 online software suite will help retain customers considering a move to Google Apps.

With a newly rebranded and refreshed hosted version of its Office productivity software suite now due out sometime next year, Microsoft made some moves to help prevent longtime customers from an outright seduction by Google Apps.

Microsoft this week disclosed Microsoft Office 365, which offers Microsoft Office, SharePoint Online, Exchange Online and Lync Online for a monthly subscription fee. Microsoft would only say that it will be available sometime in 2011.

Office 365 lets users access Office 2010 applications and documents from a PC, smartphone, iPad or just about any device with a Web browser. It also supports online collaboration and offline use with a client version of Office.

The product suite appears to be a direct response to Google, which recently made its Apps offering more like Office.

"Microsoft is determined to keep Google Apps out of the enterprise, and it is going to unsheathe its biggest weapon to do that, which is Office," said Rob Helm, an Office analyst at Kirkland, Wash.-based Directions on Microsoft.

You can buy a desktop version of Office for relatively the same price per user, so you aren't getting a deal here.
Rob Helmanalyst, Directions on Microsoft

Of course, Office 365 is more expensive than Google Apps, but Microsoft expects loyal Office customers to pay the price in the name of familiarity and comfort.

"End users won't have to learn a new system with Office 365," said Chris Capossela, senior vice president of Microsoft's Information Worker Product Management Group. "They won't see a difference because they are using the same tools they already use in the latest version of Office [2010], except it is all hosted on Microsoft servers."

Office 365 will also include Microsoft Dynamics CRM Online for business productivity in late 2011.

How much does Office 365 cost?

Office 365 for midsize and large companies ranges from $2 per user, per month for basic email to $27 per user, per month for the whole shebang, including Microsoft Office Professional Plus desktop software, email, voicemail, enterprise social networking, instant messaging, Web portals, voice and videoconferencing, Web conferencing, round-the-clock phone support, on-premise licenses, and more.

Microsoft's Office 365 package for businesses with fewer than 25 employees includes Office Web Apps, Exchange Online, SharePoint Online, Lync Online and an external website for $6 per user, per month, along with a financially-backed service-level agreement with a 99.9% uptime guarantee. In all, that's $150 per month for 25 users.

This compares with Google Apps Premium Edition, which includes Gmail, Google Calendar and Docs, Google Talk, Google Video, and Google Sites with an additional 18 GB of Gmail storage (for a total mailbox size of 25 GB) for $50 per user per year, with a 99.9% uptime service-level agreement.

Office 365 appears to be an enhanced version of Microsoft's online collaboration suite, Business Productivity Online Suite (BPOS). But its capabilities are closer to the on-premise version of Office, including Microsoft Office Professional Plus for offline use, Helm said.

Who should use Office 365?

Companies with many end users who frequently work offline are poor candidates for Office 365. "You can buy a desktop version of Office for relatively the same price per user, so you aren't getting a deal here," Helm said.

There are also concerns about what customers will get for the money in terms of storage limitations and control. For instance, the email attachment size is a little small at 25 MB, and it is unclear whether Microsoft will give customers full control of all email and spam settings.

It does make sense for companies with a mix of remote and local employees who need access to Office outside of the corporate network, as well as for small businesses that don't have IT departments but want the Microsoft Office experience, said Dave Sobel, CEO of Evolve Technologies, an IT consultancy in Fairfax, Va.

"Office 365 is something Microsoft has to have in the marketplace," Sobel said. "Office is a fantastic product, and very familiar to the majority of users. As cloud becomes viable for a portion of the marketplace, it makes sense for [Microsoft] to have a strong offering in the cloud."

Let us know what you think about the story; email Bridget Botelho or follow @BridgetBotelho on Twitter.

Next Steps

Online office app wars: Microsoft vs. Google vs. IBM

Google makes Docs more like Microsoft Office

Enterprises hold on to Microsoft Office despite Google Apps option

Dig Deeper on Enterprise software

Start the conversation

Send me notifications when other members comment.

Please create a username to comment.