Microsoft Releases Office 365 to Compete w/ Google Apps

Today, Microsoft begins to sell Office 365. This Office is “a cloud-based version of Microsoft’s e-mail, whiteboard collaboration software and word processing, spreadsheet and presentation programs”. According to “Microsoft Takes to Cloud to Defend Its Office Business” by Steve Lohr of NYtimes.com, the emergence of this cloud service should be viewed as a direct response to Google Apps. Google Apps is a cloud, “web-based alternative” and many businesses are beginning to embrace it.

The article begins with comments from a company who switched from Microsoft to Google, leading into the main point that Google Apps is now a competitor to Microsoft. The article reports 30 million active users of Google Apps. Other major transitions mentioned: The National Oceanic and Atmospheric Administration, State of Wyoming, and the McClathy Group. The subscription renewal rate is about 90%.

The Office series is a significant profitable part of the Microsoft business. With Google encouraging converts and offering $50 a year for the service, lower than typical prices for Office products, Microsoft is taking the competition seriously. As analyst Melissa Webster put it,

“There’s no doubt that the increasing popularity of Google Apps has forced Microsoft’s hand… But Microsoft is really embracing the cloud now. This is the other shoe dropping.”

Office 365 is going to have a range of prices, probably to offer different packages according to what a business can afford. Bits of the campaign have already begun and Microsoft chief executive, Steven A. Ballmer will be giving a marketing presentation. Hopefully, their late arrival “into the cloud” is due to developing a great product. If Office 365 is not a success, analyst Matt Cain believes “it really opens the door to Google… It’s a tremendous long-term threat to Microsoft and its Office franchise”.