On Google's side, despite the Google Apps price advantage and Google's announcement that 2 million companies are now using Google Apps, various research data still shows Google is losing out in the enterprise. Google Apps adoption not only lags way behind Microsoft but also trails behind OpenOffice and even IBM's Lotus Symphony. Estimated revenue for Google Apps in 2009 is $50 million, a tiny portion of the company's $22 billion war chest.
Microsoft, meanwhile, must be competitive with Web apps - but not too competitive, since these apps will presumably drive much less revenue than its longtime cash cow, the traditional Microsoft Office suite. In fiscal year 2009, Microsoft's business division (of which Office is a major component) generated a healthy $18.9 billion in revenue. Microsoft must also convince customers that it "gets" cloud computing the way that Google does.
If anyone has the cash and the consumer branding power to take on Microsoft, it's Google, analysts say. But there's still plenty of explaining to do.
Web Apps By the Numbers
The enterprise today is offered a plethora of productivity tools: There is the big horse, Microsoft Office, followed by lower-cost or free alternatives such as IBM's Lotus Symphony and Web-only products Google Apps and Zoho's Office Suite, among others.
Yet although the Web browser may be the most prevalent computing platform for both consumers and businesses, enterprise use of cloud-based alternatives compared to Microsoft Office remains low, according to recent data from Forrester Research.
In a March survey of 115 North American and European enterprise and SMB technology decision-makers, Forrester cites that 81 percent are currently supporting Office 2007 - while only four percent are using Google Apps.
Moreover, despite Office 2010's higher price than current alternatives, one-third of survey respondents plan to upgrade to Office 2010 in the next year and one-quarter plan to upgrade in the next two to three years.
So does Google Apps stand a chance against Microsoft Office in the enterprise? Maybe not right away, but Google is in a good position to advance as the enterprise shifts to the Web, say industry analysts.
"Google is a Web company and it has the most resources to bring the enterprise to the Web," says Sheri McLeish, analyst at Forrester Research, adding that "mixed environments where Google complements Microsoft are the wave of the future."
However, McLeish is not convinced yet that Google is fully committed to the enterprise, saying that while Google's clean and simple user interface caught on with consumers, it may be too limited for businesses.
"For instance, Google Wave seemed like a good idea, but it needed a critical mass and didn't get it," says McLeish.
Google Apps and Office 2010: Prices and Features
Google Apps has a price tag of $50 per user per year that includes Gmail with 25GB of storage, Google Docs (word processing, spreadsheets and presentation creating tools) and other apps such as Google Sites and Google Talk. Google's Postini virus and spam protection also comes with the suite. There is an extra fee for message archiving of $13 or $33, depending on the duration of archiving needed.
Last month, Google revamped its Google Docs editing tool to improve speed and real-time collaboration, an area where Google Apps trumps Office.
On the Microsoft Office side, price for the full suite range from $150 to $680 depending which of its many versions you are looking for. With Office 2010, Microsoft will be offering Office Web Apps, free but not fully-featured online versions of Word, Excel, PowerPoint and OneNote.
There will be three versions of Web Apps: One for consumers supported by ads; a hosted version for businesses that pay for hosted accounts on Microsoft Online Services, which is powered by SharePoint; and a corporate in-house version for enterprises with volume licenses for Microsoft Office and a SharePoint server.
Office 2010 will launch for businesses on May 12, but Office Web Apps are not scheduled to launch until mid-June.
Microsoft also has BPOS (business productivity online suite) in its arsenal, a part of Microsoft Online services that includes online versions of SharePoint, Exchange, Office Communications Server and Live Meeting for $10 per user per month for all four apps.
Built for Enterprise vs. Built for Cloud
Despite the cost advantage of Google Apps - an advantage perhaps even more attractive at a time of economic recession and a time when consumers are used to Web apps for home computing - Forrester's research is not the only data showing Google trailing by a mile in the adoption race.
A survey of 800 IT managers worldwide in January 2010 by ITIC (Information Technology Intelligence Corp.) shows that four percent of businesses are using Google Apps for their main email and productivity software. The survey also shows that Google Apps is most widely adopted at small businesses.