It long seemed that Google's business software suite would appeal
mostly to small businesses and start-ups, but the notion is catching
on with larger enterprises -- in large part because of price.
It has taken years, but Google seems to be cutting into
Microsoft's stronghold: businesses.
Google's software for businesses, Google Apps, consists of
applications for document writing, collaboration, and text and video
communications -- all cloud-based, so that none of the software is
stored on an office worker's computer. Google has been promoting the
idea for more than six years, and it seemed that it was going to
appeal mostly to small businesses and technology start-ups.
But the notion is catching on with larger enterprises. In the
last year, Google has scored an impressive string of victories at
organizations including the Swiss drug maker Hoffmann-La Roche,
where more than 80,000 employees use the package, and the U.S.
Department of the Interior, where 90,000 use it.
One big reason is price. Google charges $50 a year for each
person using its product, a price that has not changed since the
software made its commercial debut, even though Google has added
features. In 2012, for example, Google added the ability to work on
a computer not connected to the Internet, as well as security and
data management tools that comply with more stringent European
standards. That made it much easier to sell the product to
multinational enterprises and companies in Europe.
Many companies that sell software over the cloud add features
without raising prices, but also break from traditional industry
practice by rarely offering discounts from the list price.
Microsoft's Office suite of software, which does not include e-
mail, is installed on a desktop PC or laptop. In 2013, the list
price for businesses will be $400 per computer, but many companies
pay half that after negotiating volume deals.
At the same time, Microsoft has built its business on raising
prices for extra features and services. The 2013 version of Office,
for example, costs as much as $50 more than its predecessor.
"Google is getting traction" on Microsoft, said Melissa Webster,
a program vice president with IDC, a market research company. "Its
'good enough' product has become pretty good. It looks like 2013 is
going to be the year for content and collaboration in the cloud."
Microsoft has also jumped on the office-in-the-cloud trend. In
June 2011, it released Office 365, and it now offers its software in
both a cloud version and a hybrid version that uses cloud computing
and conventional servers. Office 365 starts at a list price of $72 a
year, per person, and can cost as much as $240 a person annually, in
versions that offer many more features and software development
capabilities. Microsoft says it offers more than Google for the
money, but the product has not won many converts from Google.
In a recent report, Gartner, an information technology research
company, called Google "the only strong competitor" to Microsoft in
cloud-based business productivity software, though it warned that
"enterprise concerns may not be of paramount importance to the
search giant."
Google is tight-lipped about how many people use Google Apps,
saying only that more than five million businesses were using it as
of June, up from four million in late 2011. Almost all of those
