On Microsoft Office’s Perilous Future

Microsoft’s technology dominates corporate IT departments. The sad reality is that businesses have been slow to adopt the new cloud stuff. And yet, when it comes time for businesses to finally upgrade their tech, they are realizing that Google’s offering is not only superior to Microsoft’s, but it is also a lot cheaper.

NY Times:

Google maximizes the appeal of documents, calendars and spreadsheets at a cost of $50 a person a year. Many companies say that is 50 percent to 80 percent cheaper than Office.

Not to mention, Google is forcing Microsoft in to spending a bunch of money on customer retention. Slowly, Google is chipping away at Microsoft’s profit share.

NY Times:

Most corporate software is sold through big consulting firms, like I.B.M. or Accenture, but Google has yet to use a partner. “They have approached other companies, but others think it’s not in their best interest,” said David M. Smith, an analyst with Gartner. He estimates Google gets just $150 million a year from Apps, and that it is not enough to cover costs. Google says it does make a profit.

Instead, it uses the business in “asymmetric warfare” with Microsoft. “Google spends $1 to make Microsoft spend $10 defending itself, because Microsoft went after Google on search,” Mr. Smith said.

Microsoft is dismissive of the situation.

Your new home office will sit in the cloud and be paid for by your employer. Face it, that is the future. Look at the current crop of recent college grads. An unprecedented number of us are working from home on our computers (me!).

This setup benefits not just the employee, but also the employer. Employers can use the cloud to cut costs. Social interaction with your coworkers will be done in the cloud, not at the physical office. At least, that is what Marc Benioff wants us to believe.

When it comes time to upgrade their infrastructure, businesses will make a rational choice and choose Google Apps over Microsoft Office — it is cheaper and easier to use.

(Source: techmeme.com)