Threats Loom Large for Microsoft’s Email and Collaboration Platforms


This week, at its Berlin TechEd conference, Microsoft announced the arrival of its Exchange Server 2010 product, which the company wants enterprises to adopt widely for on-premise deployments as well as web services, and showed it working with with its Outlook 2010 email platform. Steve Elop, president of Microsoft’s Business Division, presided over the announcement, peppering the introduction of the new Exchange/Outlook offerings — a relatively expensive messaging and networking duopoly that is in place in half of networked enterprises — with citations about their potential cost savings for enterprises and enterprise-friendly features such as legal email archiving compliance capabilities. However, rather than underscoring the strengths of Exchange and Outlook, the approach called attention to the significant competition Microsoft now faces, including newer, free software offerings. Are Microsoft’s days at the heart of enterprise messaging and collaboration numbered?

Google is among the companies taking aim at Microsoft’s gravy train. As’s Michael Miller notes, Google CEO Eric Schmidt recently made very clear that he has his eyes on the enterprise software market: “The enterprise is the next big billion-dollar business after the new display (advertising) business,” he said at the Gartner Symposium conference. Schmidt’s also thrown in a number of recent direct shots at Microsoft.

As Google Docs, Gmail, and Gmail Pro have matured, they’ve become very viable alternatives to Microsoft’s expensively licensed competitive applications. Can businesses run entirely on such tools and avoid bloated software license fees altogether? Absolutely; we do so here at The GigaOM Network. It’s very convenient, especially from a collaboration perspective, to use cloud-based competitors to Microsoft’s software tools. As Tom Reestman noted in his article, “Why Microsoft Office Web Is Good for Its Competitors,” Microsoft’s own attempts to deliver its applications and platforms to the cloud include stumbling blocks for enterprise users:

“The first disappointment is that, despite the word ‘free’ being bandied about a lot, Office 2010 web is not free for corporate users. The free version is for consumers (using their Hotmail/Windows Live account). Enterprise customers can use the Office web apps via corporate access licenses (CALs) for the suite. In other words, Microsoft is saying that for the enterprise the web apps are only a supplement to their productivity needs, not a solution in and of themselves. This could be a major stumbling block for the small- and medium-sized businesses that might have been considering Office’s web apps over competitors like Google Docs or Zoho.”

This is all a big part of why Microsoft’s Elop placed so much emphasis on purported cost savings that can be reaped from the combination of Microsoft Exchange 2010 and Outlook 2010. He noted, for example, that Exchange can now work with less-expensive storage platforms than SANs. He was also careful to point to legal email compliance features in the new Outlook. But the simple fact remains that businesses are proving left and right that free, and nearly-free, software competition is where real cost savings can be had.

page of 2
You must be logged in to post a comment.
3 Comments Subscribers to comment
  1. The biggest win by far for Gmail is the City of Los Angeles, not in contract size (30k users) but in the symbolic nature of a stodgy government bureaucracy leaving the entrenched Outlook for a web-based email system.

    Microsoft is chasing smaller companies with Bizspark, but I would imagine the large majority of tech firms at least are using gmail/google apps. Startups and small companies like GigaOM are natural – but its these big enterprises and govt contracts that are by far the most worrisome for Microsoft.

    1. Indeed, it’s very significant, especially given that many commentators believed that governmental bodies wouldn’t be able to have cloud-based email/file storage solutions.

  2. “Of course, enterprises don’t just shift their messaging and collaboration platforms on a whim”

    I think that’s the key point — Exchange is very deeply entrenched in many organizations. Moving to another solution would not be easy or cheap. Also, as I pointed out in a WWD post yesterday ( many conservative corporate IT departments would be deeply uncomfortable with shifting data onto Google’s servers rather than their own.

    that said, Google is making inroads with some big name wins recently for Google Apps — Jaguar Landrover (15,000 users), Rentokil Initial (35,000 users), Motorola’s handset division (20,000 users) and Konica Minolta (7,000 users)

Explore Related Topics

Learn about our services or Contact us: Email / 800-292-3024