Google's Big Government Win Humbles Microsoft, Sorta

Google trumps Microsoft for a cloud deal with the GSA, to which Microsoft feigns humility and brings out the fightin' words.

In the war to win Uncle Sam's e-mail and collaboration app business, Google won a big battle yesterday. In response, Microsoft swiftly posted a pre-emptive "this doesn't bother us, it's good for competition" blog post that has a hidden message. But more on that in a bit.

The U.S. General Services Administration, which supplies products and communications for U.S. government offices and provides transportation and office space to federal employees, announced it has chosen Google for a five-year, $6.7 million contract that will migrate 17,000 government employees off different versions of IBM's Lotus Notes and Domino software to Google Apps.

Bye bye IBM, helloooooo Google.

Unisys is also on the contract as the service provider and will implement Google Apps' cloud-based e-mail and collaboration tools to all GSA employees in 17 locations around the world.

Google said that this is its biggest government contract and is the result of a six-month bidding process against Microsoft, and others.

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In a blog post, Google Federal Enterprise Director Mike Bradshaw writes that the GSA's move to a cloud platform will not only help the agency, but also you and me.

"Taxpayers will benefit — by reducing the burden of in-house maintenance and eliminating the need to replace hardware to host its e-mail systems, GSA expects to lower costs by 50 percent over the next five years," writes Bradshaw.

The GSA contract is the latest chapter in the skirmish between Microsoft, Google and others to win over cash-strapped government agencies that are more likely than the private sector to use cloud-based services to run and store e-mail and documents.

"Obviously, this is a big win for Google because the GSA manages the contracting process for the entire federal government," says Forrester vice president and principal analyst Ted Schadler. "What the GSA learns from this will be available to other government agencies looking to upgrade e-mail."

This deal also solidifies a two-horse race for government agency cloud contracts between Google and Microsoft, adds Schadler.

Google certainly has had a good run with government deals recently, counting the entire state of Wyoming, municipalities such as Washington, D.C. and Orlando, Fla., and the largest county in Oregon as new Google Apps customers.

The company now has Google Apps customers in 30 states, according to Google spokesperson Andrew Kovacs.

Microsoft, to be fair, has also been closing deals with state governments to use its e-mail and collaboration cloud service, BPOS (recently rebranded as Office 365). In the past month and a half, Microsoft has secured large contracts with the states of California, New York, and Minnesota.

A key plot element in the race for Uncle Sam's cloud business is that Google is openly accusing Microsoft of receiving favorable treatment in state government bids.

On Nov. 1, Google filed a lawsuit against the U.S. Department of the Interior, claiming that the DOI is "unduly restrictive of competition" because its bidding process for a contract worth $49.3 million over five years unfairly benefits Microsoft.

This may explain Microsoft's high road response to yesterday's Google GSA win. Rarely, in my experience, does Microsoft alert reporters about a competitor's victory, express regret about losing the bid, and say things like "The GSA's decision [to go with Google] underscores how robust competition is today, not only between Microsoft and Google, but also Cisco, IBM, VMWare and many others."

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