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Originally published June 28, 2011 at 7:13 PM | Page modified June 29, 2011 at 7:58 AM

Microsoft Office 365 and Google Apps compete for small businesses

Microsoft on Tuesday started selling Office 365, a cloud subscription version of Office that starts at $6 per user a month that targets small businesses.

Seattle Times technology reporter

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Even though its media event was in New York, Microsoft turned its sights to Main Street instead of Wall Street on Tuesday as it rolled out a service that targets florists, cleaning services and other small companies with a handful of workers.

Microsoft started selling Office 365, a cloud subscription version of Office that starts at $6 per user a month.

Calling the new service "where Office meets the cloud," Chief Executive Steve Ballmer said at the event, broadcast online, "We believe that the best collaboration technology has to be available to all business, from massive global enterprises with thousands of workers to feisty startups with just a couple of employees."

Office 365 will compete directly with Google Apps and Docs, which Google sells to businesses for $50 per user per year.

It's a significant step for a company that has long relied on an army of IT service firms to upgrade and maintain software, back up files and patch security holes for businesses.

Office 365, now available in 40 countries, is a package of Microsoft Web software that includes Outlook Exchange email, SharePoint collaboration and Lync unified communications, as well as Word, Excel, PowerPoint and OneNote. It comes with 25 gigabytes of storage per user.

Businesses will use Office 365 through a Web browser. They can also opt for a regular version of Office 2010 that works with the Web service.

Office 365 is part of the company's move to the cloud, where software and data are stored on remote servers run by Microsoft and accessed through the Internet with a laptop, desktop, mobile phone, tablet and television. It offers similar features to what a business would have if it set up servers to run Exchange, SharePoint or Lync.

Microsoft has partnered with 20 telecommunications companies to resell Office 365 with other services they sell to small businesses. About 70 percent of the 200,000 companies who tested the beta version over the past several months were small and medium-size businesses, Ballmer said.

At the New York event, Microsoft demonstrated how people can create websites on SharePoint, collaborate on a Word document or set up Web video conferences.

Kevin Lisota, chief executive of findwell, has seven employees at his Seattle real-estate brokerage. He used to work at Microsoft so he's more tech savvy than most real-estate brokers, but he wanted to stop managing servers.

"I have enough to do without worrying whether I need to back it up and upgrade it," he said. "All the time I spend working on IT stuff is time away from doing what pays the bills."

He has been testing the beta version of Office 365 with his office. So far, he said, it's as stable as his in-house server was.

"From a cash standpoint, I don't like having a $3,000 to $4,000 expenditure" for software upgrades, he said. He prefers Office 365's subscription model, which is "like a rent payment."

Office 365 lets his agents do things only larger companies with more technology can do, such as holding online meetings with customers. That's important to findwell's customers, mostly high-tech workers.

"It makes us look way bigger than we actually are" when we can run online meetings, Lisota said. The software also helps his agents stay in constant contact. "They expect people to be available 24/7."

Microsoft stock rose 2.4 percent and closed at $25.80 a share Tuesday.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com

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