Google Versus Microsoft: Office 365 Strikes Back

Authors: Jim Lundy, David Mario Smith                              Date: May 29, 2014
Topic: Workplace                                                        Research Note Number: 2014-14

Issue: What technologies and architectures should enterprises leverage in the workplace?

Summary: The Office war is not slowing down. Microsoft is in an all-out migration campaign to move users to Office 365. Google remains a popular option for cloud-based email, but Google’s editing tools have not matched Microsoft Office.


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The battle for the office continues between Microsoft and Google (see Note 1). In this latest round, Microsoft has been running an aggressive Google replacement campaign since the launch of Office 2013 and Office 365. It is proving to be successful in large accounts where Microsoft is willing to negotiate.  In this report, we analyze the current state of the office suite marketplace, the continuing competitive fervor between Google and Microsoft, and what actions enterprises should take.

Different Goals, Different Product

Microsoft’s goal is to maintain its office suite dominance by keeping its broad base of existing customers happy and building growth in new segments like the cloud. Google’s is to move new and existing email and Office users to the cloud. The differing objectives and tactics produce differences in these two core offerings.

The Move To The Cloud

Microsoft has found its stride in the cloud and has battled Google effectively since the launch of Office 365. That said, the Microsoft focus has been in large accounts and in select government accounts. It often comes down to a showdown on price, and then Microsoft will come close to matching Google.

For a growing number of enterprises, office communication and productivity suites are leading candidates for migration to the cloud. Cloud computing promises more agile deployment, lower costs, reduced maintenance and support staff, and pay-as-you go incremental growth. Combined with flexible client choices and support for the needs of an “anytime, anywhere” workforce, enterprises are finding the cloud office a preferred workplace.

The battle for cloud office suites is two-pronged. Google and Microsoft are facing off on email and on office document creation and editing. Phase I of the battle was focused on email, which is still the driving cost factor. Enterprises are beginning to understand that cloud email can offer a number of benefits.

As we indicated in our first report, Phase II of the battle is about online Office editing, which can yield another round of cost savings. After a slow start, Microsoft now has a compelling story on shared authoring, with users now able to jointly create and edit Office documents.

Office Online (formerly called Office Web Apps) is now easy to use on devices without Office locally installed. This was originally Google’s main value proposition, but Microsoft has matched it.

Microsoft’s Mobile Moves Counters Google

On March 27th, Microsoft announced Office for iPad and made most of the Office Apps available for free on the iPad, as long as the user had an Office 365 account or a Microsoft Home Premium subscription.  Microsoft had already made OneNote and Lync clients available for iOS, Android and Symbian. This move, a symbol of the Nadella Era at Microsoft, marks a significant departure from the past.

In the few weeks since the announcement, Microsoft has already updated PowerPoint for iPad and added mobile printing support.

Shared Editing: No Longer a Differentiator

Shared editing was one of Google’s original value propositions, but Microsoft Office 365 has now matched it and gone further. Since then the advantages of being in a native Office environment appear to be trumping Google in the midterm. We know from experience that portability and conversion issues are a big downside for Google.

Countervailing limitations for MS include their inability to get over the big-dollar license addiction that forces users to do weird things like not using Office for their office documents, and the remaining feature differences between cloud and desktop and different OS and browser environments (even between Mac and Windows). But these are theoretically easier to overcome than the non-nativity of Google overall, particularly now that Google seems to privilege Chrome so much.

Viewing and editing inside content management and social platforms has become a more common feature set. Our opinion is that many of those tools fall short of meeting knowledge workers’ expectations. Two solutions that have been getting traction include Apple’s iWork offering (free with new iOS device purchases) and IBM Docs.

Is Google Moving Fast Enough on Mobile?

QuickOffice from Google is a basic set of editors for both iOS and Android tablets that can save content in the native Microsoft Office document formats (.xlsx, .pptx or .docx). Google purchased QuickOffice in 2012 and little seems to have changed. In October 2013, Google made QuickOffice free in both the Apple iTunes and Google Play stores. It connects to Google Drive for cloud storage. In addition, Google has introduced standalone apps, such as the Google Docs word processor and the Google Sheets spreadsheet.

We saw no compatibility challenges with QuickOffice documents saved in Microsoft Office formats. However, we found the user interface slightly less intuitive than Office for iPad. So, the bottom line is that Microsoft, which has been late to mobile, is making a major pivot.

Google Docs Mobile App

The Google Docs mobile app, while more basic than Word for iPad, is a very efficient tablet word processor. We installed it and were editing in minutes.  However, tables created in Google Docs were not viewable in the Google Docs mobile app on an Apple iPad. Overall, while we think this is a good move for Google, they appears to be reacting to Microsoft rather than leading.

Google Sheets

Google Sheets, the Google app comparable to Excel, performed similarly to Docs. It was easy to download, and automatically integrated with Google Drive on iPad, with no configuration needed. The Sheets app does the job but again, it is not as polished as Excel for iPad.

Presentations

At the time of this writing, other than QuickOffice, which can create native PowerPoint presentations, there is no standalone Google mobile presentation app. This is where we see the weak link in Google Apps authoring. Google Presentations is not competing with PowerPoint, giving Microsoft a lead that has not been challenged.

Can Google Apps for Business Compete with Office 365?

This is a different question than we asked before. For some organizations, a comparison between Office 365 and Google Apps should begin with a mobile app evaluation, and so far Microsoft comes out on top. On top of that, when both the desktop and mobile licenses are included, the functionality slants toward Microsoft.

Collaboration and Social Face-Off

Lync vs. Google Hangouts

While Google Talk was the original IM/presence option for Google Apps enterprise customers, Google has now branded its real-time communication and collaboration offerings under the new Hangouts. This does mean that the former XMPP-based Hangouts will not be compatible with the new Hangouts.

Lync Online is looming. It is easier to install than Lync on-premise. That said, enterprise voice is still the outlier here. Our advice is to use Lync for instant messaging and peer-to-peer collaboration and look at complementary offerings for multiparty meetings.

Google has been making moves in collaboration. Its instant messaging is installed as a standard capability. There are occasions where it does not recognize that Chat is installed on a Mac, but other than that, it works well.

Google Hangouts is where Google is ramping up its capabilities. Large meetings work well and this cloud scalability for meetings is where Google outshines Lync.

Google Plus vs. Yammer

Yammer is being adopted by many enterprises and is oftentimes viral. With the announced departure of Vic Gunnotra, who was lead over Google Plus, the future of that social network is in question. Google will move those resources over to its Android platform group. We believe this is a move to shore up its mobile platform business in light of Facebook’s purchase of WhatsApp. Google will focus on the mobile platform and introduce Google Plus features there. Google still has work to do to make this an enterprise offering. Microsoft has the edge here with its Yammer network, which has gained enterprise traction.

Aragon Advisory

  • Enterprises need to balance price vs. value of Google vs. Microsoft.
  • Enterprises already paying a CAL license to Microsoft may want to shift to Office 365.
  • Enterprises should ask both Google and Microsoft for detailed roadmaps, particularly for mobile.
  • Enterprises should negotiate with Microsoft for better prices on E3 and E4 pricing plans.

Archived Research. Visit Coverage Areas page for up to date information and coverage.

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