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Some industry watchers believe Microsoft is offering steep discounts on BPOS to get the deal closed, while Google is doing the same with Google Apps Enterprise.
As part of its Microsoft contract, New York will move about 30,000 employees to Microsoft's Business Productivity Online Suite (BPOS) of cloud apps, which earlier this week was re-branded as Office 365. Some of the savings is expected to come from moving some of these employees to the Deskless Worker version of BPOS, which costs between $2 and $3 per seat monthly as opposed to $10 per seat monthly for the full suite.
Given Microsoft's ferocious competition with Google for cloud mindshare, and Google's recent customer wins in the states of Colorado and Wyoming, solution providers say it makes sense to highlight the cloud in every deal. "It does seem like Google and Microsoft are going tit-for-tat," said one source, who requested anonymity. "After Google got Los Angeles, Microsoft probably thought, 'Who can we get that's even bigger?'"
But even without the cloud message, the New York deal sounds like a case of outsourcing IT to Microsoft and letting the company handle everything, which can hardly be seen as a departure from the past.
"It's definitely one way to ensure that if and when New York is ready to embrace the cloud, Microsoft will be the default position," said Tony Safoian, president and CEO of SADA Systems, a North Hollywood, Calif.-based solution provider.