SMBs, partnerships key to Microsoft-Google cloud battle

Capturing IT spend of Asia's number of small and midsize businesses, and forming strong channel partnerships, will determine both tech giants' plans to dominate regional market for cloud-based productivity tools, says analyst.
Written by Kevin Kwang, Contributor

To come out tops in the cloud-based office productivity tools tussle, vendors such as Microsoft and Google will need to capture the majority of Asia-Pacific's growing small and midsize businesses (SMBs) base as well as have a robust channel partner ecosystem to support their customers' deployment of the products.

According to Daniel-Zoe Jimenez, program manager of enterprise applications and business analytics at IDC Asia-Pacific, the cloud computing market in Asia-Pacific continues to develop rapidly but cloud services are still "relatively new" to the region and emerging as a component of one's enterprise IT portfolio.

He pointed out that the region was a "mosaic of cultures", with geographic and business factors, as well as the level of software and cloud maturity, affecting end-user's purchasing behavior. As such, adoption of cloud-based productivity tools in the region varies from country to country, vertical industry segments and company size, he added.

In IDC's latest Asia-Pacific survey on cloud adoption trends, the most mature markets such as Australia and Singapore were more receptive to cloud-based office productivity tools, while South Korea was also "seeing good traction", he noted. Jimenez did point out that such tools are "fairly new" to the market, with Google Apps in the space longer than Redmond's Office 365--which was made publicly available on Jun. 29, 2011.

Different strokes by different folks
Microsoft and Google told ZDNet Asia that the region's adoption figures made for positive reading, and went on to elaborate how they were differentiating their products from other competitors.

The Google spokesperson, for one, said that 5,000 businesses around the world signed up each day for Google Apps--the company's enterprise-grade online productivity suite--of which a "healthy percent" of those are from Asia-Pacific.

Microsoft, too, has seen "extremely encouraging" adoption throughout the region and was "pleased" with the performance of Office 365 so far, its spokesperson said. In Hong Kong, for example, new customers were up over 250 percent since the service was publicly launched last June, with over 55 percent of these coming from the SMB sector.

Both vendors have a different vision for their cloud-based tools, though.

The Google spokesperson said that it had a "fundamentally different" perspective from Redmond, adding that Office 365 remained a desktop software, while Google Apps was "100 percent Web". "Businesses have a clear choice and it's worth considering a clean-slate approach based on entirely modern technologies designed for today's world," he stated.

Software giant Microsoft, on the other hand, stated that it has the "proven track record" to help enterprise customers realize the benefits of the cloud. The spokesperson said only it has the "depth of product offerings, infrastructure, and investment to effectively define the next era of cloud computing".

He pointed out that since Google has no on-premise product offering, it mandates the move to cloud as the way to go without any analysis of a customer's needs and their long-term strategy for existing IT infrastructure. Redmond, however, believes in protecting customers' previous IT investments and whether they choose to move completely to cloud computing or prefer to stick to on-premise provisioning, the choice is theirs to make, he explained.

Sam Walker, director of eVantage Technology, an accredited Microsoft Cloud Accelerate partner, weighed in on the debate, saying that Google's value proposition is largely cost-based and, putting this factor aside, Office 365 had several distinct advantages in terms of features and functionality.

For example, he said Office 365 was more enterprise-friendly in that its integration and co-existence with existing services such as Active Directory and Exchange server help provide a more seamless integration process.

Allowing for staged deployment is another plus for enterprises, he added. Walker said its larger customers have migrated their users to Office 365 in phases, often country by country, but this was not possible with Google Apps as the deployment must be completed all at once which can be particularly challenging for these companies.

Cloud consultancy firm The PointStar Group, which provides implementation services for Google Apps, pointed to IT consumerization as a trend that was playing to Google's strengths. Company CEO Justin Lee said Google's approach has been very consumer-oriented, with its core Gmail product similar to its free, consumer-grade e-mail client to reduce users' learning curve.

"The main benefit many clients see in Google Apps lies in the innovative, maybe even whimsical, approach to creating this new class of 'consumerized' enterprise software," he said. "The proliferation of smartphones and tablets is also pushing many executives to adopt Google's software in their organizations."

Michael Barnes, vice president and research director at Forrester Research, helped put the overall landscape into perspective.

He said: "Microsoft currently appeals to organizations seeking productivity with minimal disruptions to the organization and existing users. Google, meanwhile, appeals strongly to organizations seeking an alternative to the traditional Microsoft platform and tools, particularly those with minimal existing investments in either Outlook or Office."

He added that both companies are expected to remain viable players for the foreseeable future, or at least until an entirely new paradigm shift emerges and renders the current vision of productivity suites obsolete.

SMBs key battleground
Jimenez added that while Microsoft and Google were the strongest contenders in the cloud-based productivity suite space currently, they would also have to contend with increasing competition from Cisco, IBM and Zoho.com.

Thus, to win the battle in Asia-Pacific, vendors will have to focus not on product functionalities alone, but also strengthen their partner ecosystem and target the growing SMB customer base, he advised.

Partnerships, in particular, were "essential" to succeed in the region and the SMB market, and Google and Microsoft have recognized this, Jimenez noted. Both companies have made strategic agreements with key telecom operators in markets such as Australia, South Korea and Singapore. In Singapore, for example, Microsoft is partnering StarHub to offer Office 365 while Google allied with SingTel to deploy Google Apps.

The analyst concluded: "IDC believes that the company that manages to address the needs of this growing segment will succeed in the cloud-based office productivity suites battle."

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