The Cloud Changes
The world of computing is changing fast. The web has matured and ‘The Cloud’ is a concept joining the mainstream. Businesses are beginning to understand the benefits that this model of working can provide. However, it is possibly less clear to the average business the best way to embrace working in The Cloud. In the past, small and large businesses alike would have instinctively turned to one technology company above all others to help with their next tech challenge: Microsoft.
However, if these businesses are thinking of The Cloud they might have struggled to find a solution from Microsoft as they have only relatively recently arrived in this market. As we moved further and further into the 2000’s, the world increasingly embraced working on the web but Microsoft steadfastly focused on their traditional sphere of desktop computing, primarily Windows and Office. With the launch of Office 365 a couple of years ago they belatedly tried to make amends and catch up with their competitors. However, in racing to make up for lost ground they appear to have created an internal conflict which can only be resolved with negative results. Negative results which have been all too obvious with the recent firing of their CEO, Steve Ballmer.
The challenge is that with the world starting to move away from the ‘Wintel’ desktop to a multi-platform, web-based approach, Microsoft’s business strategy is fundamentally undermined. They’re stuck between two stools – the inevitable growth of more affordable, online, distributed computing on one side and on the other, their desktop-based revenue generators, Windows and Office. How to bridge that gap? Offer cloud services, but only sort of, kinda, a bit. Offer cloud services that are tied to desktop applications. Great idea! But how to cover the lost revenue that your company was founded on and your shareholders and partners expect? One answer seems to be: charge more than your competitors, including Google, for the cloud experience. But not only that, require users to have a desktop version of the most expensive version of Office (£300 one-off licence or £8 per month forever) if they want to access all the features. This could be described as the hazard of half-measures. They’re stuck between two stools.
When you look at Google, you realise that it benefits when it gets more people using the Internet for more of the time, because it dominates search and search advertising. Hence its bold moves – making maps free, offering enormous amounts of mail storage for free, giving away the operating system for Internet-enabled smart-phones in the shape of Android. All these moves are aimed at undercutting anything that puts a price barrier in the way of people getting online.
Having been forced out of their comfort zone by the combination of Apple’s iDevices and Google’s web services, Microsoft are squeezing themselves into some strange niches. It’s notable that Office 365 is sold as “cheaper and easier than hosting Exchange your on your own servers”. Even if that’s true, they’re trying to steal Google’s cloud talking points which puts them in an awkward spot of trying to have their cake and eat it. They’re undercutting themselves, which is an odd thing to do unless you’re getting extreme pressure from competitors. Shareholders really don’t like that either. Yet, even having gone that far, they still seem to be leaving the low-end and light users to their competitors.
Where does the introduction of Office 365 leave their long-established and loyal partner network? By bringing services in-house (Exchange, Sharepoint, OCS-replacement Lync) that were previously administered for clients by partners they’re cutting out the middle man – the very people who helped grow their dominant position. How will this affect the partner network in the future? Microsoft was built on it’s partners but it seems all too willing to abandon them in order to survive.
True Cloud Computing?
Office 365 is a big step forward for Microsoft but it has a number of issues. To create documents you need to use the desktop edition of Office or go separately to the Office Web Apps page. Office Web Apps are only intended as browser-based extensions to the desktop version of Office so are feature-light compared to Google Docs. They also require the most recent versions of Office. Counter-intuitively, you need desktop software to use the full feature set of this so-called cloud solution.
Clearly Office 365 is the more expensive product but it also has a more complex pricing structure – the transparency of Google’s pricing is valuable. Functionally, Office 365 appears to be a hybrid experience which involves an element of juggling. It’s not a seamless cloud experience. Microsoft’s Office 365 fails to deliver all the benefits of cloud in terms of client-neutrality (knowing you can work on any computer you have in front of you), freedom from the hassles of managing local desktops, and removal of the need for on-premise servers. You still need Office, there is still a bias towards Windows, and some features actually require on-premise servers.
Microsoft’s core business: Windows and Office
Google’s core business: online advertising
Which is going to disappear first? Which is the better company to go with for the long term? Who has a track record of innovation and openness? Who has a track record of brutally stifling competition and only innovating as much as they absolutely have to?
G Suite (Also known as Google Apps) is a pure cloud offering backed by the sustainable revenue stream of the world’s dominant online advertising provider whereas Office 365 is representative of its creator: a half-breed standing on shifting sands of the decline of its traditional revenue generators. On cost, price transparency, history of innovation, partner expectations and future market evolution Google is better placed. Microsoft has upped their game but there is only one option that we’re comfortable recommending and it’s not Office 365.
Opaque and Expensive vs Transparent and Affordable: Which would you prefer?
|Office 365||G Suite|
Business Essentials – £4.56 per user per month
Business – £9.50 per user per month
Business Premium – £11.30 per user per month
Enterprise E3 – £25.77 per user per month
Enterprise E5 – £36.96 per user per month
Basic – £3.30 per user per month
Business – £6.60 per user per month
Enterprise – £20 per user per month
From the above, a ten-person business will pay £396 a year for G Suite (Known as Google Apps) or £427 a year for Office 365 at a minimum. A ten-person business will also pay £2400 for G Suite at a maximum, or just shy of £4435 for the Office “equivalent”. N.B. Microsoft pricing is an example for guidance – it’s very difficult to present Office pricing in any concise way due to the myriad options they promote.