Google Apps makes gains on Microsoft Office

Google Apps was long seen as too lightweight to be a competitor to Microsoft Office. But Google Apps has added features and maintained a low price over the years, and now the cloud software suite is starting to tempt companies away from Microsoft Office.

Fred Prouser/Reuters/File
More and more companies are considering the cloud-based Google Apps suite as a serious competitor to Microsoft Office. Here, a city bus in Los Angeles shows an advertisement for the Microsoft Surface tablet.

For years, Microsoft Office was widely considered to be the way for businesses to get "serious" work done. Google Apps, the cloud-based office suite, wasn't generally thought of as being stable or full-featured enough for company use. But as Google Apps has matured, more and more companies have noticed -- and in 2012 Microsoft found its core business base eroding as offices jumped ship to Google.

Google has been promoting its software for business use since 2006, focusing mainly on small businesses that didn't need all the features of Microsoft Office. Now, The New York Times' Quentin Hardy reports, big companies are starting to notice Google as well. New Google Apps clients in 2012 included Hoffman-La Roche, a Swiss drug company with over 80,000 workers, and the U.S. Interior Department, where 90,000 employees use Google Apps.

Google's pricing is a big mark in its favor with businesses. The Google Apps suite, which includes word-processing, data-entry, spreadsheet, and presentation programs, has added features at a steady pace for several years, but the price of the software -- $50 a year for each business user -- has stayed the same. By contrast, Microsoft Office will cost $400 a year for each business user in 2013, although the Times notes that many companies pay half that with bulk discounts.

Microsoft hasn't ignored the cloud-software trend, though. Last year it released Office 365, an online version of its venerable software suite, which costs between $72 and $240 per year for each user, depending on how many features are needed. Julia White, a manager in Microsoft's business division, says Office 365 is "on track to be [Microsoft's] fastest-growing business," according to the Times, although the company hasn't released figures on usage. In late 2011 and early 2012 Microsoft's business divison made almost $24 billion -- but that revenue came almost entirely from conventional Office software that runs on computers located on companies' premises.

Google announced this summer that more than five million businesses were using its Apps suite, although nearly all of those companies have ten or fewer employees. So big companies like Hoffman-La Roche aren't jumping to Google Apps en masse, although the Times notes that Google won 23 of the 42 large government contracts for which it competed with Microsoft in 2012, compared with 10 for Microsoft.

Neither company is boasting about its total number of enterprise users, and it would be inaccurate to suggest that Microsoft is hemorrhaging business customers. But as companies put more stock in online collaboration, Microsoft will have to find ways to make Office 365 more attractive -- or come up with another strategy to tempt businesses away from Google.

For more tech news, follow Jeff on Twitter: @jeffwardbailey.

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