Microsoft vs. Google: An e-mail showdown at L.A. City Hall

The city of Los Angeles has a decision to make. You see, the city's old school e-mail system is pretty outdated and in need of a major overhaul. But like most other municipal governments, the budget for new tech systems is pretty tight these days. And so, city officials have been weighing the option of jumping on board with a cloud offering.

It's a contract worth $7.25 million, according to a report in the Los Angeles Times. But, in the long-run, it's worth so much more than that. Los Angeles is the second largest city in the U.S. and scoring a contract to overhaul and modernize the e-mail system could be a major score for either company.

For Microsoft, a win shows that Outlook and Exchange are still big players and worthy of an investment by one of the largest enterprise customers in the nation. (The city currently uses neither Microsoft nor Google for e-mail services.) For Google, it would be a major score for the cloud and could serve as a springboard to prove to other cities around the globe that Google's e-mail cloud is, in fact, ready for prime time. Talking about Google, Los Angeles city councilman Bernard C. Parks tells the Times:

It would be a flagship contract that they can market to the rest of the country. When you buy it and they put on their masthead that you're one of their customers, you find a trail of cities that say 'I'll follow suit.'

The contract is reportedly such a big deal that members of the council have been told that both Microsoft CEO Steve Ballmer and Google CEO Eric Schmidt would be happy to come down to L.A. and visit with council members about their decisions.

The city seems to be leaning toward a Google offering but lobbyists have landed on the doors of City Hall to express concerns about security, confidential information and reliability, all important issues that have prompted city officials to (wisely) ask more questions.

Microsoft, of course, is pointing to recent Gmail outages as reasons to think twice about the cloud. Google, by contrast, is touting not only its presence in other large companies and municipalities but also the cost savings that come with taking the cloud route. And it also pointed to the government cloud it's working on, as part of a federal technology initiative announced earlier this month.

The Times reports that the Google offering has cleared one council committee but needs the OK from a second one before going to a vote by the full City Council. No date for that vote has been set.