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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.
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.
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There are businesses out there that find themselves in this situation. Serena Software, for example, subscribes to GAPE, but Gmail and Postini are the only Google Apps the company orders its employees to use. Docs, Sites and the rest may be used at a Serena employee’s discretion.
When eWEEK apprised Google of Capossela’s comments regarding the value proposition of a more granular pricing model, a Google spokesperson responded with a shrug:
“At $4.17 per user per month, we’ve already made it very easy and affordable for businesses to use one or all of the products in the Apps suite. In our experience, many companies start with a few applications and then adopt others like Sites and Video as their employees find ways to use them to get their job done more efficiently. Even so, we’re always listening closely to our customers and incorporating their feedback into our offerings.“
So, Google isn’t apologizing for the blanket GAPE pricing, but it’s clearly not closed to making it more granular in the future. Capossela’s comments may tip Google off to the advantage of offering, say, Google Docs for $25 per user, per year, which would increase the value of that suite as an alternative to SharePoint Online. eWEEK put the question of which SAAS pricing model is superior to industry analysts.
Radicati Group’s Sara Radicati noted that while Google Apps is still less expensive overall than Exchange Online and SharePoint Online, many businesses are used to Outlook and Microsoft products.
Hence, these businesses will pay more to retain some of the same interfaces. Also, the cloud option means they will be paying less to maintain the applications than if they were running the software in-house on their own hardware. Radicati concluded:
“Basically it’s a big market and while Google Apps will appeal to a lot of very price-sensitive customers, there is also a very large chunk of customers that are not only focused on price but are mainly looking the same functionality they have today but at a lower cost of operation.“
Meanwhile, Forrester’s Chris Voce has advice for customers on the fence about productivity and collaboration SAAS from Microsoft and Google.
Noting that e-mail tends to be tightly integrated with business applications such as backup and archiving, Voce said it’s best to stick with a vendor that will offer the messaging application that best suits your business’ needs. So, if you’re an Exchange shop, stick with SharePoint and Office LiveMeeting rather than using Google Sites or Docs.
Microsoft might have made SAAS pricing granular, but if you follow Voce’s logic, you don’t want to stray from Microsoft’s Online Services to Google’s Apps. Pick a side and stick with it.
What pricing model suits your fancy? Is it GAPE for $50 per user, per year, or Microsoft’s more variable pricing scheme?