Should Microsoft Fear Google Apps?

Can Microsoft convince customers to upgrade to the full version of its forthcoming Office 2010, due for release May 12?

While that question has been looming large for awhile, today The Wall Street Journal's Nick Wingfield once again raises that specter focusing on the formidable challenge from Google. Wingfield said "Microsoft seems to be staring down the Google threat," pointing to wins by General Motors and Starbucks.

Google has 25 million Google Apps customers, though Gartner says only 1 million are paying customers. The report says there are 40 million paying Microsoft Office online customers, a small but noteworthy fraction of the hundreds of millions of Office users.

With Office 2010, Microsoft is adding its own Web-based client that will extend the use of apps such as Word and Excel to the browser. Moreover, Office 2010's ability to link to the forthcoming SharePoint Server 2010 will make the two a unique pair of products that will enable new levels of collaboration within enterprises and among extended work groups (for a deep dive on Office 2010 see the cover story in the current issue of Redmond magazine).

Microsoft appears to be shrugging off Google Apps as a threat to its Office franchise. But Silicon Alley Insider editor Henry Blodget begs to differ, writing "Microsoft Should Be in Major Panic Mode." Why? Blodget argues that Google has improved the capability of its offering and that many Office users will migrate. Microsoft can add more features, he argues, but those will appeal to a small subset of overall users.

"So don't take the puny size of Google's App business and the fact that big companies aren't seriously considering Apps as an alternative as a sign that Microsoft is safe," he writes.  "Microsoft isn't safe.  Microsoft is very exposed."

Since launching its partner program last year, Google recently reported that it has signed on nearly 1,000 solution providers. One of them is Tony Safoian, president and CEO of SADA Systems, who is both a Microsoft Gold Certified Partner and a member of Google's program. Safoian appeared last week on a Redmond Channel Partner Webcast hosted by editor-in-chief Scott Bekker.

"We feel like there are customers that are a great fit for Google and culturally they may be a little different," Safoian said. "And there's customers who will never get away from a desktop oriented experience or they just love the Outlook interface and they've invested a lot in that technology. We are just being honest and faithful to the market in being able to speak intelligently about both solutions and being able to offer whichever one makes the most sense."

Are you looking to upgrade to Office 2010? If so, why? Or should Microsoft be in panic mode? Drop me a line at [email protected].

Posted by Jeffrey Schwartz on March 29, 2010