Office 365 is now selling at a $1 billion run-rate, but Microsoft is finding Google Apps a formidable competitor in some areas of the cloud software market.
Last week at its Worldwide Partner Conference, Microsoft held an invitation-only session with partners to talk about how to deal with the Google Apps menace, The Register reported Monday.
In the session, Therese Connor, senior corporate planning manager at Microsoft, urged Office 365 partners not to let customers drift to Google Apps.
"It can be incredibly costly to actually win the account back. In some instances, we've had to buy out the contract as an example," she told partners.
Connor told partners Microsoft is having a tough time competing with Google in the U.S. corporate territory managed (CTM) space, which encompasses some 18,000 customers.
In cases where Microsoft has lost to Google, half of the time it's because customers were using older versions of Exchange and Office, Connor said in the meeting.
Connor, in a frank admission, said some customers have ditched Microsoft cloud apps because they felt "overwhelmed" by the "complexity" of Microsoft's licensing and pricing terms.
Where Google only sells two SKUs for Google Apps, Microsoft has a "whole host of complex SKUs," which some customers find "dizzying," Connor told partners.
A Microsoft spokesperson declined to provide additional comment on The Register report. Google couldn't be reached for comment.
The CTM space is a cloud battleground, but some Microsoft partners are having success against Google in this segment. Last year, Ric Opal, vice president at Peters & Associates, a Microsoft partner in Oakbrook Terrace, Ill., won back a 500-seat account in the corporate territory managed space.
"At the end of the day, the people were asking for their Office experience," Opal told CRN.
At WPC, Microsoft COO Kevin Turner said Microsoft has won back 250 customers in the past year who'd previously switched to Google Apps.
But one partner that sells cloud software from both companies told CRN there are just as many customers going from Microsoft to Google.
"If we move a customer from Google Apps to Office 365, it's just as tough to move them back because they've just made a commitment. Both can be very sticky if they're well deployed and managed," said the source, who spoke on condition of anonymity to protect his vendor relationships.
So, while some cloud app customers are switching back and forth between Microsoft and Google, most seem to be staying with what they have, because it's tough to switch.
"Cloud services are really hard to transition to and back from," said Dave Sobel, director of partner community at Level Platforms. "All of your data is in the cloud, so you need a transition tool."
PUBLISHED JULY 16, 2013