Microsoft was put on the back foot today by the announcement of Google’s Office challenger, Apps Premier, its subscription package of premium, business applications hosted online.
For $50 (£26) a year per user, Google Apps Premier Edition will offer business customers a number of web-based applications including email, word processor and spreadsheet. It will compete with Microsoft Office’s desktop-based Word and Excel.
A Microsoft spokesman downplayed the launch, claiming online services such as Google’s are “not alone in altering today’s technology industry. Productivity applications represent a very competitive space in which more than 450 million users around the world have consistently chosen Microsoft.”
The Times (London) says : “Microsoft’s Business Division, which includes Office, accounted for $3.5 billion of the group’s revenues of $12.5 billion in the latest reported quarter, making it the largest source of sales. However, industry insiders say that Google has been quietly preparing for months to tap Microsoft’s cash-cow. Keen to supplement its lucrative search business, Google has built massive data-storage plants, thought to be years ahead of those so far developed by Microsoft and IBM.”
This “cloud” is now being used to host both software and data, while the internet becomes ever more the operating system.
Tom Austin, of Gartner, the technology analysts, said: “This constitutes a real threat to Microsoft’s business model. Eventually, it will have to switch from limited-use licences to software as a service. That will require a fundamental reengineering.”
Despite investing heavily in Office 2007, which was released earlier this month and which, like its predecessors, is anchored firmly to the PC, Microsoft has earmarked $2 billion to develop its own data centres.
The company added that it is now partnering other businesses “to capitalise on emerging services, such as advertising-based software, subscription or on-demand software”.
Most of the Premier Edition components are already available free. “From today, for the first time, it will charge for “white label” tools that carry its customers’ brands, so that e-mail addresses can be in the name of the client company.”
Former Microsoft evangelist and blogger, Robert Scoble, says Microsoft’s CTO, Ray Ozzie is planning a similar service to Amazon S3 :
