Microsoft and Google launch new assaults on the cloud

Not since the early ’90s, when IBM fought its last stand against Microsoft for the desktop, have we seen anything like the epic battle between Microsoft and Google for the cloud.

On Friday we witnessed this conflict in microcosm at InfoWorld’s offices. Microsoft representatives stopped by in the morning to demo an early beta version of Office 365, the company’s bundle of Office Professional Plus 2010 with cloud-based versions of Exchange, SharePoint, and Lync. That afternoon, Google representatives popped in to demo Cloud Connect for Microsoft Office, a free add-on that allows existing versions of Microsoft Office (2003 and up) to sync Office documents with Google Docs and engage in simultaneous group editing.

[ Also on InfoWorld: Check out J. Peter Bruzzese’s rundown of BPOS services.| Read Neil McAllister’s review of Microsoft Office Web Apps. | See Frank Ohlhorst’s “Top 10 Office 2010 features for business.” ]

There’s no equivalency here: Office 365 is a huge endeavor that is both the future of Microsoft Office and a major 2010 revision of Microsoft’s BPOS (Business Productivity Online Suite). The enterprise edition comes with a 99.9 percent uptime SLA, email archiving for compliance, and IT-level phone support. Google Cloud Connect is a simple little 3MB utility. But both products build a bridge from the Microsoft Office desktop to the cloud, and I find it hard to believe that the timing of Google’s last-minute appointment to demo Cloud Connect was coincidental. It’s war, all right.

The Microsoft Office 365 juggernaut

Office 365 leads Microsoft’s assault on the cloud. It marks the first time Microsoft has bundled a desktop version of Office with a BPOS-load of cloud services in a single subscription — at a hefty $24 per user per month.

The small-business edition, which offers the cloud services alone and integrates with both Office 2007 and 2010, costs just $6 per user per month without the phone support or archiving. If you like, for $16 per month you can opt for the E2 enterprise version and use Office Web Apps without Office being installed on your system at all.

For most Office 365 customers, the big deal will be offloading Exchange to Microsoft’s servers, although, of course, you still need to administer Exchange in the cloud. But as you wade into Office 365, the most exciting benefit is that both SharePoint and Lync are ready and available. I’m not sure what percentage of Office customers use SharePoint, but I know many fewer use Lync (known as Office Communications Server in its previous incarnations). With both SharePoint and Lync running, the collaborative capabilities — real-time document co-editing, voice, chat, video, and so on — are well integrated and pretty stunning.

Microsoft’s mobile missteps

As a cloud offering, one problem with Office 365 so far (it’s an early beta, so we can’t say for sure) is that it’s pretty much an all-Microsoft affair. Yes, Office Web Apps runs well on all the major desktop browsers, and yes, the enterprise version of Office 365 syncs with BlackBerry Enterprise Server. But iPhone and iPad? Our preliminary tests indicate that you’re not going to get a lot of work done on iOS devices with Office Web Apps or SharePoint — same deal with Android. Apparently, the first marketing bullet for Office 365, which is “access to e-mail, documents, contacts and calendars on nearly any device,” holds true only if “access” means viewing rather than editing. InfoWorld’s Galen Gruman will provide more on these mobile compatibility issues later this week.

Not surprisingly, in our demo Microsoft emphasized integration with Windows Phone 7. By the time Office 365 is ready for release to customers sometime in 2011, I hope for Microsoft’s sake that Windows Phone 7 will have undergone a major revision. As our deathmatch between Windows Phone 7 and Apple iPhone 4 demonstrated, the dumbed-down version of Mobile Office, the lack of cut and paste, and the absence of on-device encryption (which rules out secure email) make Windows Phone 7 a poor choice for business use.

The desktop-cloud value proposition

Cynics are saying that Office 365 is just Microsoft’s way of getting people to upgrade to Office 2010. Actually, I think it’s a lot more than that. Even though BPOS was a similar play, pushing Exchange, SharePoint, and Lync servers into the cloud (and in the enterprise edition, making integration with local Active Directory instances part of the deal) is a momentous shift if Microsoft puts the full force of its marketing machine behind it — which it didn’t do with BPOS. Office 365 really is the future of Office, while BPOS — despite Microsoft’s inflated claims that it has 40 million users — was more of a prequel Microsoft could learn from to ensure it got 365 right.

But will customers buy the Office 365 value proposition? We haven’t done a full cost analysis yet — comparisons with volume licensing deals are unbelievably hairy. But at $24 per user per month for the enterprise version, it seems unlikely there will be much in the way of cost savings, although that will depend on how much of an organization’s resources have gone toward maintaining the stuff Microsoft will take on (patches, upgrades, scaling Exchange, and so on). The $6-per-user-per-month Office 365 small-business version is more competitive with Google Apps for Business ($50 per seat per year), but it’s recommended for 25 seats and tops out at 50 — and it lacks the enterprise edition’s phone support.

If all people want is a way to link Microsoft Office to the cloud, Google Cloud Connect provides one more reason not to upgrade from their current Office version. It’s basically a handy utility that adds a toolbar to Word, Excel, and PowerPoint, enabling you to sync Office documents to their Google Docs equivalents in the cloud, do some simultaneous group editing, and track versions. By no means is it a competitor to SharePoint; that would be Google Sites. Cloud Connect’s role more closely resembles that of Microsoft SkyDrive. But it beats the heck out of manually uploading Office files to Google Docs.

The air war is on

For me, the juxtaposition of these two demos in one day was symbolic of the struggle between these two companies. On the one hand, you have the huge Microsoft juggernaut making its slow ascent into the cloud; you can almost feel the shudder of its mighty Saturn V engines as it strains to break the bonds of its desktop legacy. On the other hand you have Google flitting around in the stratosphere launching a little ultralight this and a little ultralight that, assembling a floating world that offers just enough for those who don’t need heavy-duty functionality.

You’ll see a complete preliminary eval of the Office 365 beta from Neil McAllister later this week. Whatever the final analysis, I’m betting that in the future we’ll see fewer PC users upgrading to the latest version of Microsoft Office and more of a two-class world: high-end users with Office 2010 and/or Office 365, and due to the potentially enormous cost savings, the rest of us with whichever combination of an old version of Office and Web productivity tools make the most sense. And if either Microsoft or Google makes a full-on effort to support the major mobile devices, all bets are off.

This article, “Microsoft and Google launch new assaults on the cloud,” originally appeared at InfoWorld.com. Read more of Eric Knorr’s Modernizing IT blog and get a digest of the key stories each day in the InfoWorld Daily newsletter and on your mobile device at infoworldmobile.com.