Microsoft: Google's Heart Not In Cloud Computing As Competition Heats Up

Microsoft is calling out its main cloud computing competitor, claiming that its chief rival isn't "all in" when it comes to the cloud.

The software superpower said that the recent launch of Microsoft Office 365, its cloud-based productivity suite, is further proof that the company is serious about its cloud plans and a sign that Microsoft is continuing to win the war against Google and its Google Apps cloud communication and collaboration suite as Microsoft and Google battle for cloud computing dominance.

"When customers evaluate us side-by-side we're winning most of the deals [against Google] when it comes to the cloud-based productivity," Tom Rizzo, senior director of Microsoft Online Services said in an interview with CRN. "And I would say it's because customers have come to expect a certain class of service and functionality that Google just can't provide, nor are their hearts really in it. At the end of the day they make their money from ads not through Google Apps."

Google, however, disputes those claims that its heart isn't in the cloud and said that cloud computing is not a zero sum game that will have one clear winner as cloud computing vendors compete in the market.

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"We're a company born on the Web and we're 100 percent Web," said Google spokesman Andrew Kovacs. "I don't know how we could be more in."

The cloud computing war between Microsoft and Google has brewed for more than a year with the pair of powerhouses going tit-for-tat with features and functions, highlighting big customer wins and vying for government and municipal e-mail contracts. Google has heavily pushed its migration tools to move users off of Microsoft products like Exchange and Outlook and has stumped to get users off of Microsoft Office and onto its cloud-based Google Docs productivity suite. Google most recently launched Google Cloud Connect for Microsoft Office a plug-in that lets Office users view and collaborate in Office documents within Google Docs and in Google's cloud.

Meanwhile, Microsoft has launched a host of cloud-focused offerings in its Windows Azure platform, Office 2010 with Web Apps and now the beta of Microsoft Office 365, which is the latest iteration of Microsoft's Business Productivity Online Suite (BPOS) cloud computing applications play and comprises Office, SharePoint Online, Exchange Online and Lync Online.

The duo is also duking it out on the partner front, with Google highlighting that it has amassed 2,000 partners in its Google Apps Authorized Reseller Program and is planning to tighten its partner program into 2011. Google CEO Eric Schmidt has said the channel plays a fundamental part to Google's strategy. Microsoft can't say specifically how many partners it has working in the cloud, but Rizzo said there are more than 16,000 current BPOS partners.

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Despite Google making waves and starting to gain mindshare in the cloud computing space, Rizzo said Microsoft's chief cloud rival isn't making the splash the industry perceives. He said Microsoft is bringing customers that defected in favor of Google back into the Microsoft fold.

"When you're talking around the cloud stuff, people always mention our competitor Google -- the G-word," he said. "The interesting thing for us is we've seen a lot of people coming from Google to Microsoft. They may have left Microsoft on-premise -- maybe they were an Exchange customer or a Lotus Notes customer or that kind of stuff -- they went to Google with their Google Apps suite and now they're coming back."

Rizzo highlighted one specific customer, a 38-seat Oregon-based SMB, that was "originally an Exchange customer, went to Gmail, had a horrible experience; IT control wasn't there, Outlook integration wasn't there, and end users revolted and they came back to our BPOS suite."

Rizzo estimated that 10 or so customers who left Microsoft for Google have returned, but said the more telling number is customers that evaluate both Microsoft and Google where Microsoft comes out the victor.

The channel tide is starting to turn too, Rizzo said, pointing to Newark, N.J.-based cloud solution provider Binary Tree, which severed ties with Google's partner program and kept its Microsoft practice moving forward.

In September, Binary Tree, which specializes in cross-platform messaging migration and coexistence solutions, dropped its partnership with Google. In doing so, the company suspended all sales and marketing efforts for its CMT for Google Apps e-mail migration product and left the Google Enterprise Partner Program. Binary Tree also said it would now focus completely on transitioning its customers to Microsoft's on-premise and cloud-based Exchange and SharePoint offerings.

"It's simply a matter of customer demand... The customers we've talked to about moving to the cloud, regardless of their size, have told us that they don't want to move to an e-mail system that offers less functionality and decreases their end user's overall experience. They are used to a full-featured user experience for e-mail, calendaring and collaboration, and won't compromise their user’s productivity to save a few bucks," Henry Bestritsky, Co-CEO of Binary Tree, said in a statement highlightingBinary Tree's move away from Google.

Binary Tree's Europe operations General Manager Stefan af Bjur added that Google's hosted solutions failed to meet the specific privacy and security requirements Binary Tree's European customers require.

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Kovacs said that both Google and Microsoft are going to win some cloud computing deals and lose some cloud computing deals and that there will be a constant stream of customers moving between one company's cloud computing offerings to the other's. Kovacs noted, however, that there have been several instances when Google and Microsoft have gone head-to-head in a competitive bidding process and Google has come out the victor; one example is when Google beat Microsoft to win the cloud computing contract for the City of Los Angeles.

"For every customer that moves to Microsoft, hundreds more move to Google Apps," Kovacs said.

Rizzo said Microsoft offers more level of controls and safeguards in its cloud products, something that helps them beat out Google at the bargaining table. And Google's penchant for killing products like Wave and offline Docs and its lack of a clear product roadmap have partners and customers wary.

"Security and privacy are important for the enterprise," he said. "Where consumers are a lot more open, maybe unintentionally with their data, an enterprise is much more 'I cannot share this. I need to make sure it's secure and reliable' and Google usually won't give you those sort of safeguards inside of their systems."

Rizzo said Microsoft's cloud offerings are certified and offer audit trails that enable user tracking; its data centers are secure and certified; and users can set administrative policies around administration and other access.

"We don't see Google winning a lot of business," he said, citing Gartner figures that estimate Google holds less than one percent of the enterprise e-mail market. "We just haven't seen the traction of Google all that much in the cloud space."

Still, Rizzo considers Google Microsoft's chief cloud competition, despite customers making the Microsoft choice more frequently.

"It's definitely competition. But if you look at just the way customers are voting with their dollars they're voting more toward Microsoft than Google," he said. "Most of Google's customers are free, they're free version users. They're not getting a lot of paid customers, and I can understand why hearing the sort of horror stories from a number of the customers that moved from them to us in terms of support, reliability, roadmap. They're a consumer company coming into the enterprise space. That's like Microsoft 15 years ago when we were more of a consumer company trying to get into the enterprise space against the likes of IBM, Oracle and those sorts of folks. They're immature; they don't have the support, the services, the partner ecosystem, those sorts of things that Microsoft has. We can bring a lot to bear. Plus their technology is just functionally not equivalent to the Microsoft stuff."

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Google's Kovacs, however, said Google and Microsoft have fundamental differences in how they attack cloud computing customers and said that Microsoft's approach is still hinging on Microsoft's legacy in the desktop space and that their strategy is a filibuster to keep customers tied to the desktop.

"A rising tide will lift all boats," Kovacs said of the cloud computing competition. "But we don't have a big desktop anchor mooring us in one place... They have a massive desktop legacy to protect." Kovacs added that Google's upcoming Chrome OS will kick the company's cloud computing strategy up a notch by putting everything and anything in a browser.

But Microsoft's Rizzo said Google's launch of Cloud Connect for Microsoft Office and its integration between Office and Google Docs is a sign that Google is taking an if you can't beat 'em, join 'em approach in its ongoing cloud computing kerfuffle with Microsoft.

"At the end of the day, great, that's waiving the white flag that Office is going to win," Rizzo said "'We're never going to replace office.' They were singing a different tune two to three years ago saying that Google Apps will replace Office on the desktop. Now they're saying, 'We didn't win against Office, so now we'll try to integrate.' But their integration, at the end of the day, is poor. If you want to collaborate online in their cloud you have to convert that Office document into a Google documents and file fidelity is actually pretty much lost."

Kovacs pointed out that Google Cloud Connect for Microsoft Office should not be seen as a surrender, but as a bridge to the cloud, which will ultimately help Office users make the leap into Google's cloud computing offerings.

"We realize many people are still using Microsoft office and we want to work well with that," he said. "It basically takes all versions of office and makes them better."

Rizzo credits Microsoft's partner ecosystem for its deal winning ways over Google. And BPOS partners, which is Microsoft's fastest growing partner segment, coupled with the shift to Office 365, will continue that trend.

Microsoft offers training to get partners up to speed in the cloud. It has an offering called Partner Admin on Behalf, where the partner does the administration and Microsoft pays a portion of the customer subscription to the partner. And the company is investing in Windows Azure as a development platform for partners to build on and integrate with BPOS and Office 365.

Next: Microsoft Looks To Future For Cloud Computing Partners

"We have a ton of partner training that we're doing," Rizzo said. "The big thing for partners is making sure they're trained up on what the new service offer is, how they would actually do things, and so we have a whole bunch of worldwide training that we're doing right now on Office 365 to make sure our partners are armed, ready and enabled to go do that."

Partners will make money off of the services it wraps around BPOS and Office 365 and the ability to offer Office 365 services in an a la carte fashion -- ranging from $2 per user per month for the Kiosk edition to $27 per user per month for full suite – helps partners broaden their reach. Also, like Google, Microsoft lets its cloud partners own the customer relationship, but Microsoft acts as a second line of support. Rizzo estimated that for every $1 of SharePoint that Microsoft sells, there is an opportunity to add $10 to $12 of additional services on top of it to customize and extend SharePoint. "That's not pennies. That's a lot of dough," he said.

Office 365 won't reach general availability until sometime in 2011, Rizzo said, but Microsoft is working to get partners up to speed with the offers and the benefits. It's launching tools for partners so they can better tell the cloud computing story in terms of ROI and TCO. Microsoft is also showing partners how they can customize services offerings on top of its cloud platforms and launching programs like Cloud Accelerate which shifts partners' move to the cloud into high gear.

"It's definitely an inflection point and Microsoft is set up pretty well in this space. Part of that is we're bringing our partners with us. It's not only us, it's an army," he said, comparing it to the Verizon Wireless commercials with the network backing up users. "We can stand up against any competitor in this space because we've got this great network behind us."