Microsoft Office 365 fights back against Google Apps

The Burroughs Building is normally the site for swanky private parties among the glitterati who populate Toronto’s Queen Street West area. It’s a loft-like area with large, sweeping windows, hardwood floors and a flexible space for setting up a variety of table and chair configurations. In other words, it looks nothing like a traditional office, which in some ways spoke volumes about Microsoft Canada’s commercial launch of Office 365 on Wednesday.

Seating customers, partners and assorted guests around a set of sleek white leather sofas, with Surface tablets on the coffee tables, Microsoft went into great detail about new business versions of its latest hosted productivity tools, which have long been available for purchase as retail items but only recently via monthly subscription models through the Internet as a cloud-based or “hosted” service. There were plenty of testimonials from early adopters. The whole thing was a lot different from the live Canadian launch of Google Apps a few years ago – the chief difference being Google never held a formal launch event.

This is the problem Microsoft faces: Google infiltrated many organizations via individual employees who started using their Gmail or Google Docs accounts for corporate purposes. The marketing, if you could call it that, was from the ground up, with some firms reluctantly trying out hosted office tools to save money and provide more flexibility for a mobile workforce. It took Microsoft years to put aside its fears about cannibalizing the cash cow that has been its on-premise Office installed base and compete aggressively with Google. It’s only a question now of how far Microsoft has to catch up – it doesn’t generally break out numbers on how many people are using things like Office 365, whereas Google claims some 15 million Google Apps customers.

That being said, Microsoft enjoys enormous loyalty for its toolset. I still hear people refer to “living in Outlook,” Microsoft’s e-mail and calendaring combo. Microsoft Word remains the dominant word processing system for most of us (Sorry, Corel WordPerfect). What’s most interesting in the commercial versions of Office 365, however, are the other add-ons that via recent Microsoft acquisitions, including support for Skype for video calling and the Twitter-like corporate social messaging tool, Yammer.

Vancouver-based Expedia CruiseShipCenters, which is planning to roll out Office365 over the next few months, employs around 4,000 travel agents who are primarily Baby Boomers starting a second career, according to vice-president of franchise operations John Felice. They may not have technical backgrounds, but when they meet in person he said he sees tablets and other advanced tools everywhere in the room. “They embrace change,” he said. Video functions in Office 365 could significantly help with training and support, he added, as might streaming some of the company’s conference calls.

Besides recognizing that traditional offices are giving way to coffee shops and park benches, Microsoft is also facing the fact that we live in a post-PC world. That’s why Office 365 licences can be used for up to five different devices, such as your laptop, tablet, smartphone or anything else. “We used to be focused on connecting to the device; now we’re about connecting to the person,” said Microsoft Canada group manager of Office Jason Brommet.

I think Microsoft has two advantages in the new online office wars. Unlike Google, which has worked primarily via word of mouth, Microsoft has an army of consultants who can convince businesses Office 365 will be cost-effective and improve employee performance. Perhaps even more significant, however, is the legacy on-premise Office business which has been perceived as its Achilles’ heel.

There are lots of firms that won’t feel comfortable moving to office tools via a browser right away. Having the options to keep some Office tools resident in the corporate data centre (for software used by senior management perhaps) and giving hosted e-mail to lower-ranking employees might offer an easier onramp for traditionally cautious Canadian companies. Google’s scrappy, trailblazing success with Apps may have made it the software equivalent of an employee of the month, but Microsoft may still be able to convince the executive suite that Office is a star performer.