Google Apps Turns 3 as It Fends Off Microsoft, IBM in the Cloud

By Clint Boulton  |  Posted 2010-02-21

Google Apps Turns 3 as It Fends Off Microsoft, IBM in the Cloud

When Google launched its Google Apps Premier Edition to the market three years ago, it marked a bold bet on the future of collaboration software.

The collaboration software market was, and still is, ruled by Microsoft and IBM, which boast more than 650 million customers for their respective Microsoft Office, SharePoint and IBM Lotus suite combined. Microsoft and IBM also license these suites as "on-premises" software that customers install and maintain on their own servers.

Google's launch of GAPE was a departure from this on-premises model, offering collaboration software hosted on Google's servers and delivered via the Web in a method that has become known as cloud computing.

It was Google's stated intention to make money from GAPE. Until the introduction of GAPE, Google Apps was available in a free standard edition that included Gmail, Google Docs word processing, spreadsheet and presentation software.

However, for $50 per user per year, companies could offer their knowledge workers GAPE, which included those apps plus additional storage, security and, perhaps most importantly, 24/7 support.

Google Apps, which now has more than two million business customers, ranging from one-man shops to large companies, is designed to appeal to small companies that need low-cost collaboration software but don't have the resources to manage it, as well as to larger enterprises that want to eliminate the expense of managing collaboration applications themselves. This new cloud approach was something neither Microsoft nor IBM were aggressively pursuing at the time.

But by 2009, both Microsoft and IBM had released hosted collaboration solutions to keep Google Apps from being the lone wolf in cloud collaboration. Microsoft's Business Productivity Office Suite and IBM's LotusLive mark those companies' serious forays into the cloud.

Google finds itself in a daunting position on Monday, Feb. 22, the third birthday of GAPE. The company is trying to dislodge legacy on-premises installations from Microsoft and IBM while fighting off SAAS (software-as-a-service) solutions from those same companies, as well as new cloud offerings from Cisco Systems and from a slew of startups such as Zoho, Mindtouch and others.  

Google Enterprise President Dave Girouard said that while Google spent 2007 and 2008 arguing the benefits of the cloud, Microsoft and IBM helped validate the market with their products.

"We now have all major competitors in our industry in full agreement that the cloud is worth going to," Girouard said. "We view this as a good thing. If you have all of the major vendors suggesting you look at the cloud, the consideration of our solutions is going to rise dramatically."

Girouard, who promised big things for Google Apps in 2010, said Google believes it is the only "fluent, native speaker in the cloud" and that Microsoft and IBM came into its jungle. "We think we're several years ahead of any of them."

Customers who voted with their wallets, such as the city of Los Angeles, Capgemini and Genentech, would seem to agree with Girouard. For example, Brent Hoag, director of IT for cleaning product company JohnsonDiversey, said he shuttled 12,000 employees to Google Apps from IBM Lotus Notes and Microsoft Outlook because of insufficient storage capabilities.

"They're constantly archiving and getting messages that they can't send or receive e-mail anymore because they filled up their mailbox after three big attachments," Hoag said. Lotus Notes and Outlook were also slow, he found. Hoag said he was able to port JohnsonDiversey e-mail users spread across 70 countries over to Google Apps in 48 hours.

Canadian hotel company Delta Hotels and Resorts migrated 8,000 employees from 44 locations to Google Apps. Subash Raman, project lead for digital innovation at Delta, said he moved workers to Google Apps from Exchange because of storage limitations and costs. Where Microsoft offers storage inbox loads in the megabytes, GAPE offers 25 gigabytes per inbox for each worker.

"It cost a lot to upgrade your storage," Raman said of Exchange. Moreover, he said, "you had to build a lot of folders to keep your conversations together and it took a lot of time to organize it. ... The new solutions are trying to do all of those things, but Google does it better." 

Microsofts Markezich and the Cloud


Ron Markezich, corporate vice president of Microsoft Online Services, doesn't think the notion of what solution is better is so cut and dry. That's because what is better is a matter of perspective based on customer needs.

"Customers are all in different situations," Markezich told eWEEK. "Whether a customer wants to go 100 percent to the cloud today or if they want to go to the cloud in a measured approach in a period of years, we want to make sure we can bet on Microsoft to serve their needs. No one else has credible services that are adopted by some of the larger companies in the world."

Microsoft's Business Productivity Online Suite, or BPOS for brevity's sake, is Microsoft's counter to Google Apps. Available worldwide since March 2009, this package includes Microsoft Exchange Online with Microsoft Exchange Hosted Filtering, Microsoft SharePoint Online, Microsoft Office Communications Online and Microsoft Office Live Meeting.

To meet the needs of smaller companies with tighter budgets, or just those who need lightweight, lower cost e-mail and collaboration software, Microsoft also offers the Business Productivity Online Deskless Worker Suite, which includes Exchange Online Deskless Worker for e-mail, calendars and global address lists, antivirus and anti-spam filters, and Microsoft Outlook Web Access Light for access to company e-mail.

SharePoint Online Deskless Worker provides easy access to SharePoint portals, team sites and search functionality.

The standard version of BPOS costs $10 per user per month, or $120 per user per year. BPOS Deskless Worker Suite is $3 per user per month, or $36 per user per year.

However, users may also license single apps as stand-alone services from $2 to $5 per user per month. This is a departure from Google's one price for one year GAPE package.

Microsoft uses the same code base for its BPOS package, as it does its on-premises versions of Exchange and SharePoint, making it easier for legacy customers to migrate to BPOS should they decide to move to the cloud. Microsoft believes this increases the likelihood that customers will stick with Microsoft instead of fleeing for Google Apps or IBM Lotus.

Markezich claimed Microsoft has an advantage over Google because customers who choose to migrate to Google Apps from Microsoft or IBM still can't get the migration "spend out."

Moreover, Markezich claimed three-quarters of Microsoft's cloud customers are coming from Lotus Notes, including pharmaceutical company GlaxoSmithKline, McDonald's and Pitney Bowes, he added:

"The reason they are coming from Notes is they've always wanted to get off of Notes onto Microsoft, but they didn't want to invest in the hardware and skills in that transition. Microsoft Online gives them an easier, faster path to get to a higher caliber communications and collaboration platform."

GlaxoSmithKline CIO Bill Louv said he is moving his 100,000 customers from Lotus Notes to BPOS because it will cut operational costs by some 30 percent.

Louv added that using BPOS Deskless Worker makes a great lightweight option for the company's sales employees who use the Web from Internet kiosks instead of corporate-issued laptops.

Microsoft doesn't disclose exactly how many paying users it has, but Markezich confirmed BPOS has more than 1 million paid seats.

Cant Count Out IBMs Cloud


IBM offered a peek at its cloud computing intentions at Lotusphere 2008 with Bluehouse, a SAAS extranet targeted toward small and midsize businesses.

At Lotusphere 2009, the product evolved as LotusLive Engage, a general business collaboration solution with social networking capabilities from IBM's LotusLive Connections suite.

But it's hard to have a complete cloud computing offering without e-mail, the primary mode of business communications. IBM's cloud computing efforts really went into overdrive in the latter half of 2009 with the introduction of LotusLive iNotes, the company's hosted e-mail solution.

Unlike Microsoft's BPOS, LotusLive iNotes is not based on its on-premises Lotus Notes code base, but from the assets of Outblaze, whose Webmail assets IBM acquired last year. The company charges $3 per user per month for iNotes, for a total cost of $36 per user per year.

IBM also offers LotusLive Connections, a hosted social networking solution, and the aforementioned LotusLive Engage. Companies that opt to license all of the hosted solutions will pay roughly $15 per user per month, Sean Poulley, vice president of online collaboration for IBM, told eWEEK.

IBM is counting on companies using e-mail then opting to use social networking services. "It's unusual that they just buy one of the services," Poulley said. IBM currently has more than 18 million paid seats using hosted versions of IBM's Lotus software.

IBM didn't get much attention for its cloud computing efforts until it snagged Panasonic as a customer late last year.

The consumer electronics maker intends to migrate more than 100,000 users from Lotus Notes, Exchange and Panasonic's proprietary e-mail solution to LotusLive in its first year of implementing LotusLive iNotes.

When Panasonic's implementation is fully complete, it will securely extend the company's e-mail, contacts and address books, as well as social networking software, to some 380,000 seats, spanning Panasonic employees and partners, Poulley said.

Gus Bahamondes, director of IT for Panasonic, said his company was looking to reduce its IT costs and to cease managing collaboration technologies in-house.

"We did look at various other options on the market, but we came to the conclusion globally that IBM LotusLive had the most integrated solution for Panasonic," Bahamondes said, adding that the solution's flexibility allowed the company to increase or decrease employee seats and deploy solutions across Panasonic's multiple regions.

The Three-Horse Cloud Race


Customers have different reasons for why they chose Google, Microsoft or IBM. eWEEK asked Google's Girouard how the company can compete with Microsoft and IBM, the incumbents in the enterprise collaboration market.

Girouard pointed to history for incumbents giving way to newfangled approaches in computing. Just as the evolution from mainframes to the client/server model gave birth to Microsoft, the client/server era is giving way to Google and its cloud, Girouard believes. As for the naysayers who think Google is a one-trick search pony, Girouard said:

"We are hiring and building out. We hired people from IBM, Microsoft, EMC and VMware and have 1,000 people who are the best and brightest in the enterprise. We're not sitting here with just people who know consumer Web search and advertising."

Even so, IDC analyst Melissa Webster said that Google has quite a challenge on its hands, not only against Microsoft and IBM's legacy on-premises installations, but against the nascent cloud offerings from those giants. Webster told eWEEK:

"Google is a newbie when it comes to enterprise software, and so Microsoft and IBM ought to be able to leverage their decades of experience to deliver superior enterprise cloud platforms for collaboration, content management and communications. 2010 will be a very telling year, as these two titans enter the market here in a serious way."

However, Webster said Google's per seat cost is very low, posing a problem for the incumbents. She wonders whether enterprise buyers will pay more for a richer product offering.

Microsoft, meanwhile, is betting big on Microsoft Exchange 2010, SharePoint 2010 and Office 2010 this year, all of which were built from the ground up to work on-premises and as an online service. The company plans to build new capabilities into these online services over the course of 2010, Markezich said.

Markezich believes customers will because of Microsoft's ease of migration and track record in security. He also took a swipe at Google Apps, which was first rolled out as a consumer product:

"We chose not to take Hotmail, Live Spaces or Windows Messenger and make them enterprise services. We took our enterprise products and used those as the platform for our cloud services. That allows a whole other level of security and regulatory compliance you won't see in a consumer-oriented service."

IBM's Poulley believes IBM will woo more enterprises such as Panasonic to its cloud because its service is best suited to "securely extend the enterprise perimeter to the cloud. Companies don't want two types of directory management and security administrations." 

He believes the key to IBM's success in 2010 and beyond will come from IBM LotusLive Labs, the company's effort to develop new collaboration software with the help of business partners. This will include extensions into third-party apps.

For example, Poulley demonstrated at Lotusphere 2010 a bridge between LotusLive Engage and He took a contract created in, reviewed it, kicked it to an electronic signature process, signed it and shipped it off, all within LotusLive Engage.

Of course, Google, Microsoft and IBM all acknowledge on-premises solutions aren't going anywhere. There are too may installations of legacy Exchange, Lotus and other proprietary solutions for this type of software to disappear into the clouds anytime soon.

However, Girouard argued that all collaboration apps will move to the cloud in the next five years.

He said: "Where are the new apps being built? What app that is not a cloud app has been launched in the last five years? There are none. The best non-cloud app I can think of is probably [Apple's]  iTunes."

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