Office showdown: Microsoft Office 365 vs. Google Apps

Editor's note: This story has been updated to reflect the pricing and features of Office 365 features released on Feb. 27.

The war between Google and Microsoft is heating up. Each tech giant offers a productivity suite serving the essentials for serious work online: word processing, spreadsheets, email, and calendars. Should you ally with Google Apps for Business, or root for Microsoft's Office 365 for Small Business?

My experience with both brands' productivity tools reflects the workflows many small businesses face. In 2007, with staff scattered across several countries, my editorial company started using Google Apps for Business. It offered email, plus shared text documents and spreadsheets all under our company domain name and logo. Meanwhile, on the desktop, we used Microsoft Word and Excel, particularly for complex documents that we shared with clients.

If we were starting over today, we would seriously consider Microsoft's desktop-hybrid Office 365 for Small Business. For years Microsoft wasn't putting significant functionality online, but the release of Office 365 small business packages is a big step forward. This story focuses on the purely online tools that each brand offers. But in addition, Microsoft offers the full, rich Word, Excel, PowerPoint and other applications included with its Office 365 Small Business Premium suite.

Google and Microsoft each allow personal and business use of their online platform, as well as simultaneous logins to multiple accounts in different browser tabs. Beyond that, however, their platforms differ greatly in usability, functionality, and mobile support. Read on to discover the standout features and surprising weak points of each suite, with a focus on how key tools operate in a Web browser.

Online word processing and collaboration

A document preview in Microsoft's Word Web App looks good.

Google's word processor works extremely well. It can't create an index, but it has all the standard formatting, as well as hundreds of fonts. If I have a document pulled up in my browser while someone else is editing it on, say, their smartphone, I see the changes as they are typing them, letter by letter.

Google's word processor is a what-you-see-is-what-you-get app—unlike Microsoft's Word Web app. The way a document looks onscreen is the way it will look when downloaded to your PC as a Word or PDF file, when printed, or when published as a Web page. Critically important: Google saves your documents automatically. Back in the old days—2008, say—you might lose all your work at any moment. Today, changes are saved instantaneously, and if you lose Internet connectivity, you're alerted immediately.

Google Drive can sync documents on multiple machines and in the cloud. If a Google document is edited offline, there's a potential for conflict with other editors, and again if users apply Word formatting that isn't yet supported by Google. If there are no conflicts, the document syncs automatically. Otherwise, either a brand-new document is created with the changes, or you can choose which changes to use.

Formatting that looked good in preview went awry once we opened a resume template in the Word Web App.

Microsoft Office 365 shares Google's synchronization problem when documents are edited locally. The Word Web App within Office 365 has a bit less functionality. Most important, it lacks what-you-see-is-what-you-get.

Also, unlike Google, the Word Web App attempts to maintain a level of compatibility with the standard desktop version of Word, but it can't yet display all the formats. Say, for example, that you have white letters on a dark background. It looks fine when first uploaded and viewed in preview. But open the document for editing, and the résumé sections are immediately misaligned, formatting commands butt into the text, and background colors all disappear. To make sure the edits look right, you'll need to switch back to the Reading View.

Editing the same sample résumé in Google is an easier matter, as this image shows:

Google's word processor: What you see is what you get.

With Microsoft's Word Web App, trying to edit the same document from multiple locations is difficult. There's a complex process of locking, unlocking, and reconciling files if multiple people edited them at once.

If your employees need to do any serious editing, they'll need to use the desktop version of Word 2013. If they don't have that, the Office on Demand feature will stream the full Office software on nearly any PC.

Microsoft's mobile functionality is in place if you're using the well-built Office apps for Windows Phone 8, or if you've paid for Office desktop software for a Windows 8 tablet. There are no iOS or Android apps for Office 365, though third-party apps let you edit Office documents. Google, on the other hand, offers free apps for iOS and Android, but not for Windows mobile devices.

Winner: Google Apps wins. Microsoft's Word Web App isn't ready for prime time.

Next page: Spreadsheets, email, calendars, and costs...

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