Microsoft and Google Slug It Out for Uncle Sam's Cloud Business

The cloud-based office apps archrivals have ramped up the fight for city and state government customers. Is Microsoft playing fair — or as Google argues, rigging the competition?

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Tue, November 02, 2010

CIO — Judging by market share only, Google's (GOOG) Google Apps Web-based e-mail and collaboration suite hasn't begun to loosen Microsoft (MSFT) Office's tight rein on the corporate world.

But mindshare is a different story. Google has been ramping up buzz through an aggressive ad campaign and PR efforts to parade a steady stream of customers that have "gone Google".

The search giant recently announced that 3 million businesses now use Google Apps.

Last week, Google had a high-profile enterprise win with Virgin America Airlines, which decided to move from Microsoft Exchange to Google Apps. But the bulk of Google Apps most notable migrations are within the public sector — and now a battle for cash-strapped state government agencies is underway between Google Apps and Microsoft's BPOS (business productivity online suite) cloud service for e-mail and collaboration apps (recently rebranded as Office 365).

With tighter budgets than most corporate entities, government agencies have been more apt to move to cloud-based services that allow e-mail and documents to be stored in remote data centers.

Google Blindsides Microsoft in LA, then Falters

A year ago, Google pulled the rug out from under Microsoft when it won out in a competitive process to migrate the City of Los Angeles' e-mail system from Novell's (NOVL) Groupwise platform to Google Apps.

Yet that migration has been problematic for Google. It missed a June 30 deadline to have all city employees moved to Google Apps and has struggled to meet the LAPD's strict security guidelines.

As of now, Google is not saying definitively when the City of LA migration will be finished, but the company maintains that the Google Apps migration will ultimately save Los Angeles taxpayers $5.5 million in cost savings.

City of LA stumble blocks notwithstanding, Google is hot in pursuit of state governments, taking lessons learned from LA and applying them to new contracts.

Google Gets Back on Track in Big States

According to a Google spokesperson, the company now has Google Apps government customers in 30 states. Last week, Google announced that the state of Wyoming is moving all 10,000 state government employees to Google Apps for Government and will be done with the migration in one year. Wyoming will be the first state in the country to have all state workers using Google, and it estimates the move to Google Apps will save taxpayers $1 million annually.

"The state of Wyoming's decision is the result of a two-year competitive evaluation process that included Microsoft," says Google spokesperson Andrew Kovacs.

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