Microsoft Chills Out the Cloud Noise

The reaction from Redmond was swift. Less than a week after the Google Apps Team Edition announcement, Microsoft announced the public availability of Microsoft Office Live Workspace beta. Microsoft describes this as a Web-based extension of Microsoft Office that lets people access their documents online and share their work with others.
Unlike Google Apps that actually run in the cloud, Microsoft Office Live Workspace requires Microsoft Office applications to run on a person's computer in order to create documents and make changes to them in the online workspaces. Randall Kennedy, an InfoWorld Test Center contributor and longtime Windows performance expert, panned Microsoft Office Live Workspaces in a December review, citing its lackluster document-sharing features and its tardiness to the cloud computing party.
In addition to the Microsoft Office Live Workspace announcement, Microsoft revealed plans to release Microsoft SharePoint Online and Exchange Online in the coming months as a paid subscription service. Basically, companies can choose to have Microsoft host SharePoint and Exchange instead of hosting it themselves on their own servers. Much like Google Apps' online collaboration draw, Microsoft's new services will let business users access e-mail, calendars, contacts, shared workspaces, and videoconferencing over the Web.
The Microsoft announcement was a tactical move. "Microsoft is telling companies that they're coming to market, so wait before making decisions about cloud-computing services," Austin says. "This is a great market freezer."
Microsoft believes the hosted services model will eventually play a major role at large corporations. "In five years, we think closer to 50 percent of Microsoft Office users will be using Microsoft [online] services, likely in conjunction with Microsoft software," says Alex Payne, director of product management in the Microsoft Office group. The difference: Microsoft is looking to add online capabilities to Office, not move Office online. Google wants to cut into Office with online services of its own.
InfoWorld's Kennedy predicted Microsoft's embrace of cloud computing nearly two years ago. That's when Microsoft acquired application virtualization platform product SoftGrid. Kennedy says the renamed Microsoft Application Virtualization will stream Microsoft Office and other bulky client-server software to users over the Internet. That eliminates the current choice that Google's strategy seems to want to force between installed Office versus Web-delivered Google Apps.
Earlier this year, Kennedy made another bold prediction: A streaming Microsoft Office will clobber Google Apps in the cloud. He cites Microsoft Office's key strengths, such as full-fledged functionality and offline operation, as eventually winning the day.
The Long Road to the Enterprise
Google claims its efforts to crack large enterprises, including forging a partnership with Salesforce.com in April, are paying off. "We are working with three to four dozen large-size enterprises in various stages of deployment right now of Google Apps," Google's Sheth says. "Some of them, such as Genentech, have announced they'll be doing larger deployments."
In a single week in June, Gartner analyst Austin had three inquiries from companies -- "each with tens of thousands or more users," he says -- asking about using Google Apps in the next year or two. The timing is somewhat surprising since most large companies upgrade e-mail and collaboration applications on a minimum 10-year cycle. "That argues against any quick success for Google," Austin says.
The three companies were not seeking full deployments, either. "They wanted to know about segmented strategies for a certain class of employee, such as a highly mobile person who doesn't really need a laptop but has to access e-mail and corporate information," Austin says. "They asked, 'What about cloud computing? What about Google?'"
And herein lies the rub. Although Google Apps may carve out niches, it's unlikely that basic applications in the cloud will play a major role in the way giants of industry conduct business. Imagine sensitive business documents being shared in the cloud without comprehensive enterprise controls.
Not only is Google Apps not ready, says Tier 1's Shih, companies aren't either. "The general trend toward more applications, more collaboration being done online in the work environment, is pretty irreversible," he says. "But enterprises making the leap from the desktop to the cloud is still a bit of a stretch right now."
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