Microsoft hits back at Google Apps with Office 365 - NZ details

This morning, Microsoft launched a major counterattack on Google Apps in the form of Office 365.

The launch was hosted by chief executive Steve Ballmer in New York, but the online product is being rolled out worldwide, including New Zealand (see pricing below).

The company as for some time had a cloud service (Azure) for large companies, and it has dabbled with free (but feature-limited) web versions of some Office apps.

But with Office 365, it’s going full force.

Wellington based manufacturing company ESL Industries was one of 200,000 companies worldwide (most small businesses) was that took part in an Microsoft Office 365 beta test group. Director Nicholas Beauchamp said his company liked the fact after moving most of its files to the cloud, it doesn’t have to worry about backup.

Plus having all your software - and the files created by that software - hosted on the internet means few, if any, servers in your office, and less burdon on your PCs (the more expensive versions let you not just view and edit but create Word, Excel, PowerPoint and other files through a web browser interface).

Potential barriers
There’s no doubt that at some point, all of will use cloud-based apps, all the time. But will Office 365 succeed? It could, but there are several barriers.

Some media has said Office 365 will cannibalise Microsoft’s cash-cow shrinkwrapped software business.

They should take a closer look at the pricing. Sure there’s a $US2 per user per month starting price (unlike Google, Microsoft charges in local currency. Here, that translates to $6.11. Microsoft offered no immediate explanation for the supersize Kiwi charge, but with Azure, it has conceded that the closest Microsoft data centre is Singapore, and high international data charges push up pricing; The Southern Cross Cable monopoly was blamed by a guest speaker at a Microsoft Azure event in Auckland).

But for your $2 you essentially only get only email, and only a 0.5GB per user per month inbox at that

A $NZ15.25 per user per month version lets you edit Office files online as well, boosts inbox capacity to 25GB, and adds support for Microsoft Lync (offering chat, conferencing and other online communications, but not yet any services tied to recent acquisition Skype) and other features, but still only lets you edit Office files.

But you have to step up to a $NZ38.25 per user per month version to gain the same full Office capability as desktop-bound users. A version with Lync Server – meaning you could also ditch your office PABX and use the internet for all your calls – costs $NZ43. It’s keen pricing, but not killer.

(Google Apps - whose flagship NZ customers include the University of Auckland, NZ Post and NZ Post subsidiary Localist comes in a free version, plus a $US50 per user per year commercial version, which has an uptime guarantee, lifts the email limit from 2GB to 25GB and supports custom domains, among other features.) 

Chopping out the resellers?
There are other problems.

Our relatively sluggish and expensive broadband will put some customers off.

And then there are political and commercial sales issues. Microsoft NZ relies on reseller partners for most of its sales, but a cloud service is, essentially, a direct sale.

Around the time of Azure’s launch, NBR sat in on a lunch for the companies partners – company’s like Datacom and Gen-i, and many others. Then country manager Kevin Ackhurst sought to reassure his audience that they would not be cut out of the equation. They could still get a slice of the action

(albeit with kickbacks declining after the first year) for delivering new customers to Microsoft’s cloud service). But with Datacom and Gen-i expanding their own, local data centres, and a growing number of cloud alternatives, it’s a, well, foggy cloud situation.

Microsoft's Office 365 home page for NZ is here.