A couple years ago, we heard a rumour that Microsoft viewed Google Apps as the number-one threat to its enterprise business. Apparently, whenever a big Microsoft customer announced a plan to use Gmail or Google Apps, Microsoft would sic a special team on them to try and change their mind.Now, we know it’s true.
Michael Rodger is the IT director of a Canadian hotel chain called Delta Hotels. In 2009, they decided to move their company’s email to the cloud.
At the time, Microsoft’s cloud-based solution — a precursor to Office 365 called the Business Productivity Online Suite, or BPOS — was still in its infancy, and Rodger had reservations. So he decided to go with hosted Gmail and Google Apps, and told his Microsoft sales rep.
Soon, he got a phone call from somebody who identified himself as being part of the “Google Compete” team at Microsoft.
This person mentioned that Microsoft CEO Steve Ballmer would soon be in Toronto, and wondered if Rodger might want to meet him to discuss his decision.
Rodger declined — he recalls there was a schedule conflict. But he got the strong impression that Microsoft was willing to discount its software significantly, perhaps “to zero” to keep Google from winning the account.
Rodger, who was speaking at Google’s Atmosphere cloud computing conference today, says that he’s still a big Microsoft customer for products like SQL Server.
But when it comes to email, he made the right call. If he’d picked the BPOS, he would have faced a pretty significant change this year when Microsoft introduced Office 365. That would have cost a lot in consulting fees, even if Microsoft had given him the necessary software and services at a discount.
We have no idea if this particular Google Compete team is still in place. But we know that Microsoft is still offering major incentives to get customers to pick its cloud solution over Google’s — for instance, earlier this year Microsoft reportedly offered $250,000 to the University of Nebraska to pay for consultants to help move from Lotus Notes to Office 365.
This kind of behaviour shows how nervous Microsoft actually is about Google’s cloud offerings, even as Steve Ballmer goes around claiming that Microsoft wins 98% of the contracts where the two companies go head to head on a cloud computing solution.
It also shows again how hard Google will have to fight if it wants to win in the enterprise. Microsoft and other incumbents are not going to roll over easily.