Microsoft Goes On Cloud Cost Cutting Offensive

Although Microsoft has traditionally offered many business and consumer applications as on-premises software, it has been making aggressive moves into the cloud in order to match the moves of many of its longtime rivals.

Microsoft is moving more aggressively into the cloud space by reducing the cost of its Business Productivity Online Suite and expanding the available features of Microsoft Dynamics CRM Online at no extra cost. The moves are designed to counter a number of threats from IT giants ranging from Google to Oracle to Salesforce.com.

Microsoft cut the cost of the Business Productivity Online Suite—which includes the Web-based versions of Exchange and SharePoint as well as Office Communications Online and Office Live Meeting—for business customers by about a third, dropping the per-user price from $15 to $10 per month.

While Exchange has traditionally been an on-premises application for businesses of all sizes, Microsoft may be hoping that the lowered cost for the online version will attract businesses to the Business Productivity Online Suite, which would allow it to stave off a challenge from Google Apps and Gmail.

In what could be construed as a major victory for proponents of cloud-based IT systems, Google won a contract in October from the City of Los Angeles to provide about 30,000 municipal employees with e-mail. The Los Angeles City Council voted 12-0 on 27 Oct. to use Gmail instead of Microsoft’s Office Outlook, with Google promising to compensate the city in the event of a data breach.

Gmail and Google Apps are already in use by about 38,000 employees in government agencies in Washington, a fact that has encouraged Google to develop a dedicated Government Cloud for deployment in 2010.

Microsoft has denied publicly that it feels pressure from Google in the cloud-applications arena.

“[Google has] definitely been out there claiming some pretty big numbers, but a number of their claims aren’t holding up,” Stephen Elop, Microsoft’s business division president, reportedly said at a press conference in London.

To encourage businesses to embrace the cloud on its terms, Microsoft is claiming that its Online Services will be updated with new capabilities every 90 days. Those updates include an increase in mailbox storage space to 25GB for users of the standard service. Microsoft executives suggested to eWEEK that 25GB was a number frequently cited by customers as ideal for storage space.

Microsoft also expanded the reach of Business Productivity Online Suite, introducing commercial availability in 36 countries and regions including Singapore.

Previously, Microsoft announced that the next version of its Office productivity suite, Office 2010, would include stripped-down versions of Word, PowerPoint, Excel and OneNote accessible through the browser.

In related news, Microsoft announced new updates on 3 Nov. for Microsoft Dynamics CRM Online. New features, which are free to users, include increased data support and customisable views. In an attempt to pull customers away from Salesforce.com and Oracle CRM On Demand, Microsoft is also offering Dynamics CRM Online free for six months.

Other elements present in Dynamics CRM Online include simple contact management, which provides a unified view of customer information; a new homepage dashboard with real-time views of key metrics; and a new price of $44 per user per month.

“This is the way we think about this: The pricing for on-premises products has come down and become more affordable, and we think that on-demand CRM can go through a similar shift in the equation,” Brad Wilson, general manager of Microsoft Dynamics CRM, said in an interview with eWEEK. “We can drive that in the marketplace and give them a CRM at a low price and put a compelling offer out there.

“If you’re paying more for on-demand CRM, you’re paying for marketing hype,” Wilson added, in what could be construed as a jab against Salesforce and other CRM services.