Microsoft Price Cut Goes After Google Apps

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In a move aimed at heading off those who might "Go Google," Microsoft has cut the prices of its Exchange Online service by half and its Business Productivity Online Services suite by a third.

These drops, in the per-user, per-month list pricing, appear intended to help Microsoft compete with Google Apps Premier Edition, the paid version of its online apps suite.

Last week, Microsoft lost the battle for 30,000 e-mail accounts at the City of Los Angeles to Google. Timing of the big price cut by Microsoft is not being seen as mere coincidence.

Google has been promoting Google Apps, using an offline campaign theme of "Gone Google," that spotlights companies who have adopted its online apps. The company does not, however, disclose actual user numbers, saying only that "20 million" users from "2 million" companies use Google Apps.

How many of these are paid users? Google won't say. My guess--and it's just that--is less than 1 million. Google would be more credible if it revealed real paid user numbers.

The drop from $10-a-month to $5 for Exchange Online lowers the annual cost to $60-per-user. That compares to Google's $50-per-user-per-year list price for a suite that is anchored by Google Mail, but includes other applications as well.

Microsoft also increased the size of its Exchange online mailboxes from 5GB to 25GB.

Analysts say the price cuts make Microsoft much more competitive in seeking large corporate accounts, where Gmail is the primary reason to purchase. Microsoft appears less interested in SMB customers, who use the entire Google Apps suite (often in the free version).

Microsoft also cut the list price on its Business Productivity Online Services (BPOS) suite, from $15 per user per month to $10, with a five-seat minimum purchase. BPOS includes Exchange Online with Hosted Filtering, SharePoint Online, Office Communications Online, and Microsoft Office Live Meeting.

Cisco and IBM/Lotus are also competitors in the hosted e-mail market, currently dominated by Google.

David Coursey tweets as @techinciter and can be contacted via his Web site.

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