People are having interesting reactions to Microsoft's vainglorious victory over Google in luring Serena Software and its 800 or so employees back to its fold for collaboration software.
Quick back story: Serena was a long-time Microsoft Exchange shop but wanted to move to the cloud in 2008. Microsoft wasn't a cloud computing player then, at least not in terms of aggressive market positioning, but products were in the pipeline.
Serena jumped ship for Google Apps in March 2009.
All was well until Serena discovered it didn't like some of the gaps in Google Apps' functionality for Gmail and Google Docs and found the customer service to be unsatisfactory.
Microsoft swooped in and lured Serena back with its Business Productivity Online Suite, or BPOS.
Microsoft is migrating Serena from Google Apps to BPOS for free this summer and is providing a great discount on the overall enterprise agreement. That much is true, though Serena IT Director Ron Brister declined to provide the details.
I heard that Microsoft gave Serena BPOS for free for three years, a claim Serena disputes.
But let's say it is true and take it further. Let's say Microsoft continues to win customers by attrition from Google by giving away BPOS. It's pretty ingenious when you think about it and has to be scary for Google.
Microsoft makes $17 billion or so a year from Office and boasts 500 million-something seats.
Google is lucky to make $100 million a year from Google Apps from some of the 2 million businesses that pay $50 per user, per year for the premier edition.
BPOS-S, the flavor of collaboration software Serena agreed to use, costs $10 per user, per month, or $120 per year.
It includes Exchange Online, SharePoint Online, Office Live Meeting and Office Communications Online, but it's still more than double Google's price for GAPE.
Imagine if Microsoft bit the bullet and started approaching Google Apps customers with offers to migrate them to BPOS for free and let them use it for free for one, two, three years. Microsoft would lose a lot of money, but its Office dynasty puts it in a position to do this.
In many ways, it's not unlike how Google runs its business. The bulk of Google's bounty comes from search advertising, which earns the company $23 billion a year, or 97 percent of its revenues.
Google effectively floats the costs of developing Google Apps, YouTube and the rest of its Web services with search ads. Similarly, Microsoft could lean on its Office cash cow and offer BPOS for free.
Who knows where that might lead? Microsoft could lead customers to Office 2010 with Office Web Apps.
It would be a brilliant move and potentially devastating for Google. Analysts whose ears are pressed to the collaboration software ground claim Google Apps isn't doing well in collaboration anyway.
Check out this blog post from Forrester analyst JP Gownder:
"In some ways, the Office versus Google Docs debate doesn't merit a lot of consideration - it's still no competition. In terms of usage and penetration, Google Docs remains a failure - so far, anyway. Only 4% of US online consumers say they regularly use Google Docs, according to Forrester's Consumer Technographics PC And Gaming Online Survey Q4 2009 (US)."
We put a lot of stock in Google as the knighted cloud collaboration champion. It's got a (mostly) loyal customer base and some interesting applications. The new Google Docs is vastly improved.
But it's becoming clear that there isn't a champion yet, and with Microsoft BPOS and Office 2010 (with Office Web Apps as a cloud complement), the software giant may capture the cloud market from Google.
Clearly, it's still Microsoft's world. Google is just living in it. Show me data that proves otherwise.