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Microsoft strikes blow against Google with Office 2010

Office Web-based capabilities designed to stop Google's momentum

By , Network World
May 12, 2010 01:34 PM ET

Network World - Microsoft was never exactly in danger of losing the office software market to new rival Google, but Wednesday's release of Microsoft Office 2010 and related products will ensure that Microsoft remains the top choice of enterprise IT executives, analysts say.

Microsoft Wednesday announced worldwide availability of the 2010 editions of Office, SharePoint, Visio and Microsoft Project, along with new Web-based capabilities designed to stem the momentum Google has achieved in the cloud software market.

Google Apps vs. Microsoft Office

For businesses looking to save money and relieve pressure on its IT staff, Google Apps will remain a viable option, analysts say. But so far, few companies are choosing Google over Microsoft and enhancements to Office may make them even less likely to do so.

"In the business space, it's hard to see what Google's advantages are," says Forrester analyst Sheri McLeish. "It's really, at this point, Google's turn to try to woo away Office customers. To date, we haven't seen from large businesses a strong desire to move away from Office. It meets their needs, even though it is costly from a licensing prospect."

Google's had great traction with Gmail, McLeish notes, and has released many updates to Google Docs and other office tools in recent weeks that close some of the functionality gap between Google and Microsoft.

But as of today, only 4% of businesses are supporting the enterprise version of Google Apps, whereas 81% of businesses support Microsoft Office 2007, 57% support Microsoft Office 2003 and earlier versions, and 10% support the open source OpenOffice. While Google gets almost all the media hype surrounding cloud-based office tools, Forrester's survey has Google barely ahead of Zoho, another online office suite, which is supported in 3% of businesses. The numbers are based on 115 enterprises and small-to-midsize business customers surveyed in the first quarter.

Office 2010 counters some of Google's innovations in Web-based applications and concurrent editing of documents, says Burton Group analyst Guy Creese. Tight integration between Office and SharePoint will make it easier for enterprise users to collaborate, he says.

"Office 2010 is no longer just the productivity suite. It's a full-blown collaboration system now," Creese says.

Microsoft is still in danger of scaring customers away with higher prices and punitive licensing terms, however. For businesses that don't need all the capabilities of Microsoft Office the $50 per user per year price of Google Apps will remain very attractive, Creese says.

"If someone is looking at Google Apps to save money, the new version of Office is not going to change that one iota," he says.

Part of Microsoft's value proposition is the suite of Office Web Apps, which let users store, edit and share documents online. Office Web Apps will now be available to all "Office volume licensing customers," or through a separate subscription, Microsoft said.

Google is making its own marketing push this week with multiple blog posts touting the capabilities and low cost of Google Apps. In one such post, titled "Upgrade Here," Google tries to convince customers to use Google Docs in addition to Microsoft Office rather than as a full replacement.

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