Google Apps Moving Onto Microsoft’s Business Turf

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The New York Times
Wednesday, December 26, 2012

Google Apps Moving Onto Microsoft’s Business Turf

By QUENTIN HARDY

SAN FRANCISCO — 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 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 tech start-ups.

But the notion is catching on with larger enterprises. In the last year Google has scored an impressive string of wins, including at the Swiss drug maker Hoffmann-La Roche, where over 80,000 employees use the package, and at the Interior Department, 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 it 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 that comply with more stringent European standards. That made it much easier to sell the product to multinationals 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 a volume deal.

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 up to $50 more than its predecessor.

“Google is getting traction” on Microsoft, said Melissa Webster, an analyst with IDC. “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.”

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