Google, Microsoft battle for cloud-computing customers


SAN JOSE, Calif. — The pitched battle between Google
and Microsoft to sell software applications that run on the Internet
“cloud” is escalating.

The tech giants have
already engaged in a public war of words this year as they vied to sign
up businesses, government agencies and universities for their competing
versions of cloud-based productivity software.

Microsoft has cut its prices to small and mid-sized businesses for its
Office 365 software, and Google is putting out the word for the first
time that the rate of small companies signing up for cloud-based
services like Gmail and Documents has doubled in the past six months.

suggests the competition to sell cloud-based apps to small and
medium-sized (or “SMB”) businesses is only growing more intense, said
Matt Cain, an analyst with Gartner.

small-business offer “is a good deal, maybe even a great deal,” Cain
said. “So Google now faces a very aggressive Microsoft in the race for
SMB business, and the search giant is trying to get a leg up on
Microsoft via a press campaign.”

For Google, its
four-year old apps business is a chance to diversify from its heavy
dependence on advertising for its revenue. For Microsoft, the
competition is about retaining its lucrative core business of selling
Office productivity software like Word, PowerPoint and Excel.

Executive Chairman Eric Schmidt said in a speech last month that there
are now 40 million users of Google Apps, including 4 million businesses,
up from 3 million less than a year ago.

says that within two weeks of the launch of Office 365 in June, more
than 50,000 businesses, schools and nonprofit organizations had signed
up to try the cloud services, the most recent numbers that company has

The intense competition between Google
and Microsoft to sign up schools and nonprofit groups (Google recently
bagged the University of Connecticut and Yale University; Microsoft got
the American Red Cross), government agencies (Google got the cities of
Los Angeles and Pittsburgh; Microsoft got New York City and San
Francisco) and businesses (Google netted hotel giant InterContinental
Hotels Group; Microsoft got McDonald’s and Starbucks) has even spilled
into the courts.

Google says it is particularly
strong in Silicon Valley. Amit Singh, Google vice president for
enterprise, said in an interview this week that Google has completed a
study of recently launched startups in Silicon Valley and the U.S., as
listed by technology websites, and found that at least 80 percent, and
in some cases up to 97 percent, of those startups were using Google

Among the recent converts — TripIt, a San
Francisco startup that allows people to build and organize their travel
itineraries online.

“It turns out that generally
speaking, smaller companies — which are really the life blood of the
business economy; they add the most employees — have found Google Apps,”
Singh said. “If you look at how big cloud computing has gotten, we are
one of the players in that.”

Google says about 5,000 businesses a day are joining, up from about 3,000 a day less than a year ago.

Gartner’s Cain said Microsoft’s strategy to offer small businesses its
cloud-based Office 365 software, which includes online versions of its
popular Word, Excel and PowerPoint software, at just $6 a month per user
puts pressure on Google to tell its story.


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