Microsoft Slashes at Google Apps Price Point with Rapier of Granularity

When Google launched its GAPE (Google Apps Premier Edition) in February 2007, software experts were awed by the simple, one-size-fits-all pricing model for a handful of collaboration applications.

At the time, this seemed a profound departure from the CAL (Client Access Licence)- and SA (Software Assurance)-laden model of Microsoft's on-premises applications. Experts rushed to proclaim Google a challenger to the Microsoft productivity and collaboration software empire.

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Fast-forward 18 months. Microsoft, displaying a genius for one-upmanship, is arguing that Google's blanket cost for GAPE is not satisfactory given what customers really want: more choice in pricing.

Such was one of the points Chris Capossela, senior vice president for Microsoft's Information Worker division, made in differentiating the value of Microsoft Exchange Online and SharePoint Online from Google Apps for eWEEK yesterday.

Microsoft Nov. 17 broadly launched Exchange Online and SharePoint Online, the company's challenge to the popular Google Apps suite. The Microsoft suites cost $2 to $15 per user, per month, depending on what each user requires to satisfactorily perform his or her job. Capossela's pitch is:

Pricing is a great reason to consider Microsoft. We don't think the one-size-fits-all approach [of Google and other software-as-a-service providers] is what people want. We are offering a variety of capabilities at different price points because there are lots of different types of information workers. We know better that anybody else, there is a variety of ways people work. We want to give them choice.

That's the theory, anyway. In practice, Capossela said a "deskless" worker who needs only to access Outlook e-mail from Exchange will pay $2 per month, while a worker who needs to access Exchange Online, SharePoint Online capabilities and the Office

LiveMeeting Web conferencing application will cost a business $15 per month. Capossela's point is that a CIO could find Microsoft's SAAS productivity and collaboration applications more attractive than Google's because the solutions are offered as pick-and-choose options.

Josh Greenbaum of Enterprise Applications Consulting said this differentiation is smart because, "Google is a little ahead of them in the market and they clearly have to drive home a message about value relative to what Google is doing." Greenbaum also said Microsoft's granular pricing will help the SAAS model evolve.

Yet Microsoft's SAAS solutions easily cost companies more money than Google Apps. Microsoft's pricing model is per user per month, not per year. Businesses subscribing to only Exchange Online for e-mail pay $10 per month, or $120 over the course of one year. That's more than twice what they would paying for all of GAPE at $50 per user, per year.

Want to subscribe to Exchange a la carte? Go for it. Microsoft's argument is that GAPE customers get Google's Gmail, Calendar, Docs, Sites, Video and other features whether they want them or not. They don't get to select only the applications they need, which is Microsoft's value proposition despite the higher costs for its SAAS.