Google Steps on the GAS in Race with Exchange

Now we're seeing how Google could be a serious threat to Microsoft in the enterprise. For a long time, Google seemed more bogeyman than real monster, an obvious power in search but not such a big deal when it came to actually selling to businesses and threatening the Microsoft channel. Google Apps has hardly made a dent in Microsoft Office's market share, and much of what Google has offered for the enterprise thus far has really come off to a lot of IT folks as cheap and simple but not quite useful enough.

However, products that are starting to change all that are trickling out. While we're still resisting being soaked by the hype surrounding Google Wave (in large part because the product doesn't yet exist), the don't-be-evil company's latest threat to Redmond, Google Apps Sync for Microsoft Outlook, is available and is, well, a real threat.

Basically, GAS for Outlook (OK, Google doesn't call it that, but we think the name is at least memorable), now a part of the $50-per-user-per-year Google Apps business suite, lets users get their e-mail in Outlook but cuts Exchange out of the process altogether. That is to say that the Outlook interface will be there for the sake of familiarity, but instead of running an e-mail back end on Exchange, companies will be able to run it in Google's hosted environment.

This model cuts to the heart of one of Microsoft's most powerful competitive arguments, the notion that most people are familiar with Microsoft stuff and don't want to learn to use something else. Well, for the end user, nothing changes with GAS for Outlook. But for the administrator, a lot of things change: Exchange in-house is (potentially) history, while Google takes over running e-mail in what is likely to be a cheaper, albeit probably less controllable, hosted environment.

Of course, the likely real victim here from Microsoft's (and partners') perspective is Exchange Online, the fledgling hosted-Exchange service that Microsoft and some of its channel members offer. Microsoft will either have to demonstrate that Exchange Online just works better than Google's hosted service (and all the other Microsoft stuff in the infrastructure), or it'll come down to a price war...and that latter scenario is not a good one for partners.

And then there's old-school in-house Exchange, which is still a major revenue driver in Redmond and in the channel. It has the advantage of being the incumbent in a lot of organizations, but it also has the disadvantage of being relatively expensive to operate and maintain. The questions that always come with a hosted model are, of course, still going to be present with GAS, with issues surrounding downtime, compliance and controllability (yes, it's a word -- spell check recognizes it) likely at the top of the list.

But if GAS turns out to be a workable and much less expensive alternative to in-house Exchange, it could make a serious dent in Microsoft's share in that market -- and in partners' revenues. And it could set up, should business actually commit en masse to moving to hosted e-mail, a battle royale between GAS and Exchange Online, in an arena in which Microsoft would be the underdog, not the overwhelming favorite.

Is Google evil? That's hard to say. Is it a threat to Microsoft? It is now...and we get the feeling that this is just the start.

How big of a threat do you consider Google's new sync application to be? How big of a deal is Exchange for you right now? Sound off at [email protected].

Posted by Lee Pender on June 11, 2009