Microsoft Office 365 vs. Google Apps for Business: Cloud Showdown

Office 365, Microsoft's answer to Google Apps for Business, just became available to the public for beta testing. With this move, Redmond comes closer to delivering a package of tools to companies seeking e-mail, word processing, Web-based meetings, and scores of other services that work on PCs and mobile devices alike.

But wait a minute--wasn't Google Apps essentially Google's answer to Microsoft's dominance in the productivity space? After all, Microsoft has held a steady lead in such desktop software for decades. It wasn't until 2006 that Google released Docs, a bare-bones online word processor formerly known as Writely. And Docs still barely scratches the surface of the features found in Microsoft Word.

That's all true, but Google offered collaboration as a killer feature while Microsoft dragged its heels in migrating Office to the cloud. Office Web Apps--the company's online counterparts to Word, Excel, and PowerPoint--didn't reach the masses until nearly a year ago.

Users of the free Google Docs need only press the Share button to invite anyone to a document and watch each others' edits happen live. People who didn't "get" what Microsoft SharePoint does, or didn't want to pay for a corporate account, could tinker with collaboration instantly in Google Docs. That kind of lightbulb moment has radically shifted the way many people work.

Why These Services Matter

The cloud--just another buzzword for anything stored online--is where the future of productivity lies, after all. More and more workers are taking their work away from their desks on mobile devices, and bringing their own smartphones and tablets to work.

Office 365 and Google Apps for Business promise to manage the nitty-gritty, back-end tasks that many businesses pay IT staff to handle (see how that's meant to work here). Their cloud services can free a company to get things done without having to employ a tech whiz.

Migrating tools to the cloud holds the potential for big savings. Online meetings reduce the need for business travel, and Web and mobile apps enable workers across oceans to work on the same page at the same moment. Outfitting employees with software that works in a Web browser also obviates the need to install local applications and then manage updates and patches. You may not even have to equip your workers with computers--or outfit your headquarters with a server room and IT staff.

What's Inside

Office 365 combines online editions of Word, Excel, PowerPoint, and OneNote, with Exchange for mobile calendar and e-mail access. The package also provides SharePoint for an intranet and shared documents; and Lync for IM, online meetings, and audio and video calls. An extra fee covers Microsoft Office Professional Plus software, including Outlook for e-mail and calendars. Read more about what's inside Office 365, and tour its tools for end users and business managers.

Pricing for Office 365 and Google Apps for Business.
Google Apps for Business includes Docs, Spreadsheets, Presentations, Gmail, Calendar; Groups (for group collaboration), and Sites (for intranets). Google also offers a bunch of stuff that is not quite found in Office 365--but that you can get even without a Google Apps subscription--such as Reader, AdWords, Picasa, and Blogger.

Then there's the Google Apps Marketplace. Inspired by Apple's genius move of inviting third parties to build apps for the iPhone, Google has invited anyone to create tools for Apps for Business. There are apps for CRM, payroll, and accounting, just to start.

Meanwhile, Microsoft on Sunday (April 17) announced its own Office 365 Marketplace, which currently features 100 apps and 400 professional services from among 16,000 Microsoft partners.

These packages differ from the free consumer services that they include--and that are probably enough for most home-based businesses. Microsoft Office Web Apps is the name for online versions of Word, Excel, PowerPoint, and OneNote. The regular Google Apps consist of Gmail, Calendar, Docs, Spreadsheets, Presentations, Sites, and services such as AdWords and Reader.

Office 365 starts at $6 per user per month, while Google Apps for Business is slightly less expensive at $50 per year, which amounts to $4.17 monthly per seat. Microsoft does provide a nice incentive for paying for Office Professional Plus as a monthly fee, however, by making it far more affordable than the retail price of the desktop software (it's a different story if your company already enjoys a volume license discount, though).

Which Will Win?

Which tech titan is going to "own" the cloud? For now, at least, most businesses seeking a do-it-all package of go-anywhere business tools are likely to turn either to Microsoft or to Google. Consumers may be brand-agnostic about online services, but most aren't going to do the research necessary to become familiar with smaller brands such as Zoho (even though it claims 4 million users).

Google dangles all kinds of bait to lure people away from Microsoft. Google Apps Migration for Microsoft Exchange enables organizations to move e-mail, calendars, and contacts as well as PST files, and IMAP server data, to Google Apps. The Google Cloud Connect plug-in for Microsoft Office 2003 through 2010 lets you collaborate with other Google users within Office.

Google Apps opened online collaboration to the masses, but Microsoft still has room to build on its legacy and sell Office 365 hard to existing customers. Google Apps counts 3 million users, but ten times as many people use Office Web Apps. In addition, millions of people use Microsoft's Business Productivity Online Standard Suite (BPOS), which will upgrade to Office 365. Though Google remains the search king, it has nowhere near the user base that Microsoft does for any of its apps; 750 million people use Microsoft's desktop Office. Of the 100,000 people who had signed up to test the Office 365 beta, 70 percent are from small businesses.

Google Docs (left) offers a fraction of the features of the desktop Microsoft Word. Microsoft provides an online Word, but Google has no desktop-only software.
Still, the public is fickle, and business customers want whatever will save them time, money, and migraines. Microsoft and Google permit each other's offerings to integrate to some extent with their own, so users of either Office 365 or Google Apps can dabble in parts of both--at least in their consumer components. And both services are available for free, 30-day trials.

I use Google Apps daily and the desktop Microsoft Office almost as often. There are still many tasks that Google's online tools can't handle, but Google's offerings do let me access and edit documents anywhere. Why not use Office Web Apps instead? Well, by the time it became available, I had already accumulated almost half a decade's worth of documents on Google's servers.

Though my workplace uses Google Apps for Business, I also lean on the consumer Docs and Spreadsheets for personal purposes, such as for journals and all sorts of lists. I rarely need the fancy formatting that Microsoft Word or PowerPoint offers, or the deep calculations and million rows of data that an Excel spreadsheet provides. Nor do I crave a unified communications tool such as Microsoft Lync. Google and Skype permit video chat, and scores of screen-sharing and online meeting services are free. But my needs are specifically those of an editor brokering mostly in plain text. An engineer at a solar-panel start-up might not be able to function without Excel on her PC.

Microsoft can "win" this cloud battle by attracting more users than Google, which it can accomplish simply by convincing many existing Microsoft customers to adopt Office 365. However, its many moving pieces and even its pricing structure are more complex than are those for Google Apps for Business. If you want to get started quickly with a cloud package and don't need features as rich as Microsoft's, Google's option is friendlier.

Ultimately, Microsoft's package is probably a better choice for companies seeking a more formal, polished face on communications. But Google Apps for Business feels like a more natural choice for companies that do most of their work online.

Follow TechAudit and Elsa Wenzel on Twitter.

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