Microsoft executives from Steve Ballmer on down are trying to convince the world that they’re serious about cloud computing.
Google thinks they’re full of it.
Google Enterprise President Dave Girouard told me this afternoon that they looked at the Office 365 announcement yesterday and saw nothing new, just a “reshuffling” of the same old online services and packaged software with a fancy new name. Microsoft really wants to sell more of the same products it’s always sold: Windows, Office, and server software like Exchange.
“It’s one big filibuster,” he said. “From Microsoft’s point of view, they get to keep the customer right where they are today, which is ultimately their strategy.”
Talking about this morning’s announced deal between Microsoft and the city of New York, Girouard said he didn’t view it as a competitive win, mainly because Google was never invited to bid on the deal. Rather, New York simply added the option to use some Microsoft cloud computing services as part of resigning a long-term software deal.
“Look in a year and see whether anything’s changed with New York, if they’ve actually moved users to the cloud.” Girouard challenged. “After a period of time, they’ll look and see that not much has actually changed–they’re still running the same software and still doing big-bang upgrades.”
He acknowledged that Google is seeing a lot more of Microsoft on sales calls. Microsoft apparently has a dedicated “swat team” that goes into any big enterprise account considering a move to Google Apps and tries to convince them to re-sign with Microsoft instead, often sweetening the deal with discounts or other incentives. (I’ve heard similar stories from internal sources.)
But so far Microsoft’s effort hasn’t hurt Google Apps, which is seeing customers sign up at three times the rate they did a year ago.
He also said that Google has a 90% retention rate, and that’s not because of lock-in. For companies that want to switch, “Google is prescriptive on how you can get your data out of Google Apps. It’s a design requirement for all our products, and it’s documented.” He pointed to the Data Liberation Front, a Google team with its own Web site specifically devoted to explaining how to move data in and out of Google products.
Google now has an enterprise sales and support team of about 1,000 people, with its own field sales staff to land large accounts, and systems integration partners like Accenture and Cap Gemini to help with implementation. Between 25% and 30% of Google Apps sales come through these partners. He also said that Google Apps is “growing as fast as any other part of Google” and that paid subscriptions, not advertising, is where Google expects to make money with Apps.