Two reasons Microsoft should fear Google Apps

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As Microsoft continues to push Office 365, its subscription software-as-a-service offering, a new survey underscores Redmond's diminishing hold on enterprise users. And the problem will only get worse as younger users enter the workplace, if a recent study at Princeton University is any indication.

BetterCloud sells cloud management tools for Google Apps. In early February, BetterCloud surveyed its customer base—18,361 Google administratorsand received responses from 2719.

There are a lot of interesting data points in the survey results, but here are the ones relevant to Microsoft and its growing struggle in the enterprise:

  • 60 percent of respondents say their organizations are minimizing further investment in Microsoft Office
  • 64 percent who have been using Google Apps for at least two years are minimizing further investment in Office

OK, you might say. Many, maybe even most, of the respondents likely come from smaller businesses. Large organizations with a lot invested in licenses for Office software and a workforce hooked on Excel, PowerPoint, Word, and other Redmond apps understandably would be more willing to stay the course.

But 62 percent of respondents from enterprises with 500 or more employees said they also would minimize further investment in Microsoft Office. So the growing lack of commitment to Office products cuts almost equally across all enterprises.

"The survey suggests that a significant number of businesses are simply trying to escape the endless and costly Office upgrade cycle," Charles King, president and principal analyst of Pund-IT, tells CITEworld. "The classic reasoning still applies—Office is too feature-laden and complex to qualify as a common productivity suite. It's a bit like one of those 200 piece Sears tool sets—great if you're opening up shop as a mechanic but over the top if you just want to replace a light switch cover."

And the future isn't promising for legacy Office software. The newest and incoming enterprise workers are about more than BYOD; they expect to bring in and use their own apps and productivity tools, which almost invariably have to be accessible on multiple devices. And that means a cloud approach.

Google knows this. So does Microsoft, now. That's what Office 365 is all about—Redmond's bid to grab a piece of the emerging cloud-based enterprise productivity market. But Microsoft is being forced to fight away from its home turf, and it's at a disadvantage.

"Google Apps have continued to measurably improve," King says. "In fact, it's interesting to note that some of Office 365's key features—including integration with Web mail and Azure cloud storage, ape well-established Google offerings."

There's another data point from BetterCloud that spells trouble for Microsoft: 95 percent of respondents to the BetterCloud survey said more than half of the employees in their organizations use Gmail.

This makes Gmail the number one Google app in the enterprise (followed by Calendar at approximately 85 percent), according to the survey. And as BetterCloud argues, "Email is where the battle for the enterprise is won or lost."

That may be disputable, if you believe that email is slowly being replaced by instant messaging, Twitter, and other forms of social communication. But at the moment, Gmail is leading the Google Apps assault on Microsoft's enterprise territory.

In addition, Google seems to be making its strongest inroads among younger customers, if what happened last year at Princeton University is any indication.

Princeton's Office of Information Technology (OIT) wanted to ditch its old Webmail system, in part because their network was getting overloaded from students forwarding Webmail messages to their preferred email clients. The OIT early last year asked 150 students to test Gmail (available via Google Apps for Education) and Exchange 2010 (available in Office 365).

Only two out of the 150 students preferred Exchange, according to the Daily Princetonian. Last May, Princeton announced it would use Gmail for all undergraduate email, and also would make available Calendar and Docs. It's no wonder why; that's what the end users want.

Many of those end users at Princeton and elsewhere are moving into the enterprise. The problem for Microsoft isn't that they're going to lose those users; it's that they probably never had them to begin with.

"As Baby Boomers are replaced in the workforce by their kids and the habits of those younger workers—most of whom are not fans of packaged software—become the norm, traditional Office products will come under increasing pressure," King says.

"Microsoft seems to get that and Office 365 qualifies as an attempt to change the game. The last thing the company needs or wants is for Office to become the software equivalent of your Granddad's car."

This story, "Two reasons Microsoft should fear Google Apps" was originally published by CITEworld.

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