Microsoft pumps cloud, trumps Google with GSK

Microsoft pumps cloud, trumps Google with GSK

Summary: With a 100,000-seat deployment by drugs company Glaxo SmithKline, Microsoft Online Services has stepped up its validation of cloud applications at the same time as making Google's online application efforts look small by comparison.

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TOPICS: CXO, Cloud, Google, Microsoft
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Announcing a 100,000-seat deployment by pharmaceuticals giant GlaxoSmithKline (GSK), Microsoft Online Services — the software vendor's hosted Exchange, Sharepoint and LiveMeeting division — today stepped up its validation of cloud applications at the same time as making Google Apps' 15,000 seats at biotech leader Genentech look small by comparison.

Not only that. Ron Markezich (pictured), corporate VP of Microsoft Online Services, was scathing of Google's efforts to make headway in the enterprise market. "Google we really do not feel is ready for the enterprise," he said in a call briefing bloggers on the announcement an hour ago. "They're offering three-nines SLA and they've missed three of the last six months," he added, referring to last week's Gmail outage and earlier incidents. In a sideswipe at Google's offer of a 15-day credit for last week's outage, he went on to add that Microsoft maintains its services at four-nines availability, while backing up its three-nines SLA with financial penalties: "We don't just give service credits, we give hard dollars if we miss an SLA."

He went on to dismiss Google in terms that made the search and contextual advertising giant sound like little more than a minor irritation in Microsoft's competitive landscape. "Pretty much all our major customers are trialing Google Apps, but they're buying Microsoft Online Services," he said, reeling off a list of blue-chip names that have recently signed up for Microsoft's online applications — Phillips, Ingersoll Rand, Pitney Bowes, Aviva. Those others who had chosen to go with Google had made a poor choice, he went on to imply. "They've just chosen to take email and use a consumer service that's not enterprise-ready," he said.

The GSK news has been timed to coincide with the launch of Online Services in nineteen countries worldwide (also see Mary Jo Foley's write-up), along with the release of the Office Communications Online instant messaging and presence service ahead of its original schedule. The new services are available to sign up in beta now and will become paid services in early April.

GSK's previous system is a Lotus Notes/Domino system, in combination with Google's Postini mail filtering service, making it a win Microsoft can celebrate on two counts. "If a customer like GlaxoSmithKline comes over to Microsoft Online Services, then any customer in the world can," said Markezich. "It's a highly regulated customer in a highly regulated industry." Microsoft is also keen to highlight its ability to host data in geographic locations to adhere to regional privacy laws, such as those in the EU and Argentina.

Markezich predicted more wins in the coming months. "With the deterioration of the economy we've had a ton of interest," he said, reiterating his division's claims that customers save from 10% to 50% when they adopt online services, depending on whether they move from in-house hosted Microsoft products or from a competitor platform such as Lotus. "I'd expect in the next couple of months some of those large customers that might have never considered online services before will move to Microsoft Online Services in the next few months," he said.

Would a customer like GSK ever move back to on-premise servers, I wondered? No, not at all, replied Markezich. "What we've seen with all of our customers is, they always come and say, how can I move more of my applications to the cloud?" Far from being fazed by the notion, Microsoft is well placed to satisfy those requests, said Markezich. "There's not another company in the world that's going to have the breadth of cloud services Microsoft can provide."

Topics: CXO, Cloud, Google, Microsoft

Phil Wainewright

About Phil Wainewright

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant.

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77 comments
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  • One thing he leaves out. Microsoft is ONLY doing this because of

    competitive pressure. If not for Google, and others, you, the eager customer, would still be forced to buy servers and Exchange and run it all locally, and pay a small fortune for it.

    Competition is good, very good.
    DonnieBoy
    • So what. Google leaves out the reason

      that they offer these services because of competative pressures of Microsoft, Yahoo, et cetera.

      You know, places where you can get email, calendars, et cetera, without Google getting any ad reveue?
      GuidingLight
      • Right, Google was forced into online services because of Microsoft!!!

        And, just when did MS start offering these service that forced Google and others to follow suit???
        DonnieBoy
        • Yahoo, Hotmail, et cetera

          offered free email accounts with ads, google created gmail to counter

          Then when people took notice of free office suites like Open Office, and online services that Yahoo offered, throw into the mix Sharepoint, and Google started offering a free online "suite" of their own (if you could call it that) in response.

          It had to do something, so it threw together Google Apps, in fear that people would stay offline, or continue with the other's offereings.

          Now it looks as though the Microsoft offereing is much better, you can bet that there are some very unhappy people at the Googleplex...
          GuidingLight
          • Not sure how far MS wants to go in validating the cloud computing model.

            It will get harder and harder to justify the MS premium that they are used to. Google is not the only competitor here.

            But, the big difference is that Google was entering new markets, not switching strategies because old products were at risk. If the online business models and products that are available from Google and others were not viable, MS would not have to respond.
            DonnieBoy
          • True Viability has yet to be determined...It's all a cloud for now - nt

            nt
            TheBottomLineIsAllThatMatters
          • Wrong again

            As I mentioned in a separate reply, Microsoft LOVES this business. They've be happy if their customers running Exchange or SharePoint themselves switched to the hosted/service versions b/c Microsoft almost certainly makes more money. They get paid for the software/service AND for hosting and managing it. When a customer runs Exchange themselves Microsoft doesn't get paid for anything except the server license. Now they get paid more because they're handling more. It's great for the customer b/c the customer doesn't have to pay for the hardware and manage it. It's great for MSFT because they can buy hardware by the boatload at relatively low prices, automate the service management and pass most of the savings along to the end customer - but still make more in the end. It's a beautiful business to be in.
            marksashton
          • The real picture

            [i]"Now they get paid more because they're handling more. It's great
            for the customer b/c the customer doesn't have to pay for the
            hardware and manage it."[/i]

            Hardware is and software should be a one time cost.
            Now Microsoft can be paid again and again for the same kind of
            software they've used before but off-line, and guess who loses in this
            pseudo-futuristic picture? The gullible customers of course, if they
            don't understand that they've been screwed again and say no to this,
            preferably by choosing a better platform.

            Of course, a Microsoft server and a bunch of clients have not been
            cheap to maintain through the years, dozens of billions of hard earned
            dollars worldwide each year. So it's hard to say if MS customers win or
            lose, it's just safe to say that Microsoft will get richer.
            Mikael_z
          • You should probubly do a little more investigation.

            What Microsoft is doing (in a climate of staff/cost reductions) is basically providing an on-line service that provides your IT infrastructure while reducing your in house IT needs. This means that Microsft will be running most of your IT services (presuming they were Micosoft technologies like Exchange or you were planning to migrate to a Microsoft/Windows based infrastructure). This also means that you need less internal staff to manage your IT infrastructure and they can prop up their sagging stock price (perhaps a byproduct of the current economic climate/recession in the northern hemisphere and Australia). Not necessarily a negative (unless you make a living in IT or are a competitor/vendor). This is neccessary as they are having to make more cutbacks (contractors are now being required to take a pay cut or they will be cut, as an example).

            Google has a suite of services largely based around the browser as the desktop model (or Internet infrastructure model). With cuts happening, a lot of the expimental stuff is falling away (though it would be useful to get rid of the Beta tag and do more worn in areas of SLA). They prefer that everything is centrally managed on servers rather than on the desktop (local PC). They already have the infrastructure set up for storage (GFS, the Google File System) is an expanding filesystem, though it is not at the capacity of ZFS (a 128-bit filesystem from Sun Microsystems) through their own datacenters and fiber lines. The other services (as the consolidate...) are also following the on-line services model (available through your browser).

            If your existing infrastructure is (or is migrating to) a all Microsoft infratsructure, then using the <a href=http://www.microsoft.com/services/microsoftservices/default.mspx>Microsft Services</a> may make sense in these economic times. If you are not tied to this, then the Google model may be the way to go. This requires an evaluation of ones internal needs and how to go about IT infrastructure cost cutting. One could make the same arguement about <a href=http://www.salesforce.com/>Salesforce</a> if Microsoft was hosting a CRM service.

            As a note, Microsoft does provide an SLA while Google does not. This may justify going with their service (and getting rid of those costly internal IT guys).
            B.O.F.H.
          • Actually

            Microsoft does offer a hosted CRM offering - Dynamics CRM Online, and they've announced that they will in the future offer a CRM developer platform in the cloud so that people can build custom CRM apps on Microsoft's Windows Azure cloud services.

            BTW, you don't need to have "all Microsoft infrastructure" to use the Online offerings... there's a focus on making them work great online, on-premise, and have great interoperability between those environments and even across platforms.
            johnmullinax
      • Who are you trying to kid?

        All the sites you have listed all have and get ad revenue.

        Nice try at the FUD though....You lose....
        linux for me
    • Who are you trusting your CA to?

      Exchange is still a Valid choice.
      pcguy777
    • Wrong

      Microsoft has every incentive to do this whether or not Google is doing it or not.

      If somebody smart did the math they'd almost certainly figure out that Microsoft would be MORE than happy for any of their customers to move from running Exchange Server or SharePoint themslves to veresions hosted by Microsoft. Think of it this way. When a customer runs Exchange themselves today the customer has to buy the hardware, the software and pay all of the management costs themselves. Microsoft makes money selling the server license but that's it. With a hosted service they get paid (at least in part) for the hardware, management AND the software/service. In other words, they're getting more of the action. The sweet thing is that it's a good deal for both sides. Microsoft can run these services much less expensively than most other companies because they buy hardware by the shipload at very low prices and automate the software management so they can offer the service for less than the customer has to pay today - but Microsoft makes more money. I keep waiting for Gartner or some financial analyst to do the math to show this. It's a win/win.
      marksashton
      • Excellent post, I agree 100%

        The cloud may be the chance for Microsoft to remain relevant for another 20 years.
        914four
  • Well Google Apps is fine for this organization

    It's been running for a few years now, with no downtime at all.
    Microsoft are 3 years late to the party, then with no track record, say Google isn't up to it.
    Please.

    Wierd eyes too the VP guy, is he one of the undead or something?
    stevey_d
    • "no downtime at all"

      You aren't running Google Apps then. If you were actually running Google Apps (or read tech news), you'd be very aware of repeated downtimes.
      KTLA
      • look, we haven't experienced any downtimes

        Perhaps you should read the news better. The downtimes only affected some people, it wasn't the whole service.
        stevey_d
    • Well Google Apps is fine ... GREAT actually

      This guy sounds like Rush at his best. No reality just a contract that will eventually end up with the best provider even if they somehow fell into the MS web for now.

      Short sighted people will get sucked in for a while but in the long run Google is by far more cost effective and reliable. Google is better at the beginning while MS is inferior despite years of research. Just wonder if there is no under the table deal that will destroy the seemingly lucrative deal. Enron promised miracles too.
      mavr1c
    • RE: Microsoft pumps cloud, trumps Google with GSK

      @stevey_d And how big is your organization? I am going to guess far closer to 0 than the 100,000 of Glaxo. Google is indeed fine for SMBs. I have been using it for years myself for small non-profits that I deal with.

      However, the challenge for Google is enterprise scale. Google is more consumer-oriented. Thus the core pieces that make for effective enterprise deployments are lacking.
      Steven@...
  • RE: Microsoft pumps cloud, trumps Google with GSK

    I have evaluated both product offerings pretty extensively, and used Microsoft for nearly all of my professional career. I am using Google Apps for a Start Up right now, simply because the price is right, hands down. However, once we get to be the size of some of the companies mentioned in the article, Google's pricing structure is simply unrealistic. I cannot imagine why anyone would pay so much for their services.
    hismightiness