Google on collision course with Microsoft

Google Apps Premier Edition will be the first SaaS offering that enterprises will seriously consider

Google's new fee-based hosted suite of email and collaboration tools will disrupt Microsoft's model for the pricing and provisioning of enterprise email and other applications, experts predicted today.

New research from Gartner said that Google Apps Premier Edition, a package of collaboration tools and personal productivity applications aimed at enterprise users, will be the first 'software as a service' (SaaS) offering that enterprises will seriously consider over the next three years.

"Earlier competitors of Microsoft required enterprises to directly replace Microsoft Office and Outlook services and were therefore judged chiefly based on their ability to emulate Microsoft features," said the Gartner briefing.

"Consistent with the 'disruptive innovation' notion taught in business schools, Google Apps creates a new category that can coexist with Microsoft products while distinguishing itself."

The research noted that Google's Premier Edition, priced at $50 per user, is less than half the $122 that enterprises currently spend for email with much more stringent storage limitations.

"Individuals will experiment with Google Apps, employ it for short-term, ad hoc collaboration projects at work and spread word of their success to drive 'viral adoption' by other users," said the analysts.

"Viral adoption will eventually lead to end-user pressure for IT organisations to include Google Apps.

"Senior management is opening up to the possibility of using SaaS instead of making an internal capital investment, and Google Apps' cost advantages sharpen this argument."

According to an October 2006 study by McKinsey & Co, 61 per cent of chief information officers are looking to invest in SaaS-provisioned technology during 2007.

These pathways will be open to many vendors, and not just Google. Gartner believes that by year-end 2007, Microsoft, Yahoo, AOL and IBM among others will introduce SaaS offerings that compete with Google Apps.

Microsoft's SaaS offering, Office Live, does not have Office suite cognates, but the analyst firm expects it to evolve into a "direct competitor" to Google Apps.

"However, we believe that Google will have an edge in faster feature evolution. By the end of 2010, 30 per cent of enterprises in North America will likely sanction the use of Google Apps (or the equivalent from a competitor) for at least some of their users," Gartner stated.

"Through 2010, we do not expect Google's competitors to match the scale and efficiency of the 'Googleplex' as a global-class architecture for delivering SaaS.

"We expect Google Apps' collaboration features will evolve at 'internet speed'. Expect Google Apps improvements monthly or quarterly."

However, the analyst firm went on to advise firms that Google Apps is not ready as an enterprise-wide SaaS collaboration option for most enterprises.

"This is a version 1.0 product and lacks key features, such as offline availability. Furthermore, costs may exceed $50 per user per year after factoring in fees for integration, onboarding, oversight and extras such as archiving and calendar synchronisation," Gartner warned.

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