Saturday, October 23, 2010

Microsoft moves deeper into the clouds with Office 365

Microsoft just announced its answer to Google Apps, Microsoft Office 365.

Microsoft Office 365, the company’s next generation in cloud productivity that brings together Microsoft Office, SharePoint Online, Exchange Online and Lync Online in an always-up-to-date cloud service.

Google has gained a lot of traction with small businesses and educational institutions with Google Apps. But it appears that Microsoft's packaging and pricing was designed to directly challenge Google's assault on this market.

Pricing Scenarios

Microsoft Office 365 (e-mail only) $24 / user account / year

Microsoft Office 365 Small Business $72 / user account / year

Microsoft Office 365 Enterprise $288 / user account / year

Google Apps Standard Free ( 50 user limit)

Google Apps Premier $50 / user account / year

How should Google respond to the introduction of this new suite?


  1. Well.. how it should respond?
    I think it doesn't need to respond, but keep up the good work they have.

    Microsoft lacks innovation because they don't offer free services that provide them insights, like google docs does.

    and according to that guy, Google is already ahead of microsoft in terms of strategy.

    Microsoft is a giant Dinossaur... they are always reactive, never proactive.

    Like... check out the projects Google has on Google Labs and the ones microsoft has on livelabs(which is offline right now)

    With the new Chrome OS... microsoft will start to die shortly

  2. I think your Google pricing is off. For 50 user accounts or less Google Apps is free (the Standard version, which gives email and docs). The only cost is domain registration.

  3. Though everything is about price on some level, I believe the more interesting discussion is surrounding perceived value relative to price. Google is working "up" from free, and Microsoft down from the price of office - and both are increasing the utility of their products.

    At this point in time, I'd give the advantage to Microsoft. Google apps, even at a price level of "free", don't match the utility of MS Office at price points much higher (based on all the "intangibles"). I think Google's best response shouldn't be one of fiddling with price, but working on consumer perceptions - possibly increasing utility through defocussing the app, and refocusing value on information management issues.

  4. For the office suite, Google seems to be at a disadvantage with this move. The Microsoft offering seems to have more functionality even on the web app version. The spreadsheet looks almost the same between web app and native client excel app. Plus, it seems like, 365 allows the use of the client apps to access the online documents - with capability of co-authoring.

    For the mail functionality, it looks like 365 has more granular permissioning. This has long been the weakness of Google Aps, where role based permission is minimal.

    All that said, as previous posts have mentioned, Google still provides free use of the applications for individual users. This will always be an advantage very difficult for Microsoft to overcome.

  5. As a customer, I would applaud for this trend, viewed as signal of "price war" which will in the future benefit customers by lowering down product prices. Thinking about the user base, customer profile and network externality areas, I won't see much challenge from Microsoft towards Google in individual areas, as long as Google can refine its operating system, which shouldn't cost much. But in terms of business, especially large corporations, I think Google has a long way to go to catch up with Microsoft

  6. Call me cynical, but Microsoft 365 sounds like a fancy repackaging of same old online services. Microsoft's response to Google Docs is muted at best. To be fair, Microsoft still has a superior spreadsheet application (+ a few others) but with the rate Google Apps are improving, the lead will not last long (apparently Microsoft's online spreadsheet does't make charts and has limited sharing capabilities).

    I do applaud Microsoft's attempt in introducing a new business model but unless they are willing to switch completely to subscription based model, Microsoft 365 will be a complement of existing products rather than replacement. Also, since they are playing catch up and as a result, I don't think they have the luxury to charge that kind of a pricing structure.

  7. Even though Microsoft came up with similar strategy, somehow I cannot get my prejudice on Microsoft off my head that they are not just enough to get innovative as Google.

    Considering the bearuacratic corporate culture of Microsoft, they may be able to replicate the explicit strategy but I doubt how desperately they are on this.

    Also, since over 60% of the revenue are still from "Windows" for PC (mainly B2B market) and they strongly want to keep this position in the market, they are still struggling with less than 5% of revenue from Windows Mobile after years of various trials. I think Microsft 365 is just one of those trials and it is never be their high priority which you need if you really want to make it happen.

    So I guess Microsft is still struggling with this typical problem of "Innovator's Delemma" and they just can't get away of focusing the big chunk, "Windows" for PC.

  8. I personally don't believe that Google should be too worried about Office 365. Basic Google Docs is free, while basic Office 365 costs $25. This reminds me Windows Live Mail and GMail. Windows Live Mail actually has two offerings, a free version and a premium version. But how many people actually invest in the premium version, especially if there is a free version with the same capabilities (even if it's with a different provider). Thus, since Google Docs has been around longer and is free, what would convince people to adopt a paid product? Thus, I don't think that Google has anything to worry about for now.

  9. I see this product primarily oriented to target the corporate users, which from multiple utility and integral perspectives are limited in using Google Apps and rely mostly on MS Office. However, since the two markets are so much cross-related to one another, Microsoft probably uses this advantage to also influence the demand in the general consumer market. Google's vice-verso strategy didn't work so well because of certain corporate adoption limitations, but Microsoft may succeed by its premier approach to the corporate users because there are less boundaries for the general consumer to take over this product.

  10. Could someone tell me why would you want to pay 288 for a yearly service of Microsoft office Enterprise on the cloud when you can purchase the copy for 279.99 for the business edition of Microsoft Office and you can have it for say 5 years before you need to upgrade.

    Some corporations worry about security and that is why they still use Office tools despite the high premium paid and not go into Google docs or Open Office (which is pretty good comparison to M-soft).

  11. It's an incumbent dilemma!
    It would be a big fight between online and offline business if MS gives an online office to users for free but it will not happen.
    Moreover, MS can not give up huge profit in MS Office. So this pricing policy might be the best for MS.
    But Google don't need to repond. It's enough to make own way as it has been.

  12. I guess google has made a quite good move against microsofts cloud office - We can use the Office interfaces and still have our files on the cloud - for free.
    Check this out:

    Looking forward when this becomes available. I think this is a really useful addon.