Microsoft and Google Slug It Out for Uncle Sam's Cloud Business

The cloud-based office apps archrivals have ramped up the fight for city and state government customers. Is Microsoft playing fair — or as Google argues, rigging the competition?

Judging by market share only, Google's (GOOG) Google Apps Web-based e-mail and collaboration suite hasn't begun to loosen Microsoft (MSFT) Office's tight rein on the corporate world.

But mindshare is a different story. Google has been ramping up buzz through an aggressive ad campaign and PR efforts to parade a steady stream of customers that have "gone Google".

The search giant recently announced that 3 million businesses now use Google Apps.

Last week, Google had a high-profile enterprise win with Virgin America Airlines, which decided to move from Microsoft Exchange to Google Apps. But the bulk of Google Apps most notable migrations are within the public sector — and now a battle for cash-strapped state government agencies is underway between Google Apps and Microsoft's BPOS (business productivity online suite) cloud service for e-mail and collaboration apps (recently rebranded as Office 365).

With tighter budgets than most corporate entities, government agencies have been more apt to move to cloud-based services that allow e-mail and documents to be stored in remote data centers.

Google Blindsides Microsoft in LA, then Falters

A year ago, Google pulled the rug out from under Microsoft when it won out in a competitive process to migrate the City of Los Angeles' e-mail systemfrom Novell's (NOVL) Groupwise platform to Google Apps.

Yet that migration has been problematic for Google. It missed a June 30 deadline to have all city employees moved to Google Apps and has struggled to meet the LAPD's strict security guidelines.

As of now, Google is not saying definitively when the City of LA migration will be finished, but the company maintains that the Google Apps migration will ultimately save Los Angeles taxpayers $5.5 million in cost savings.

City of LA stumble blocks notwithstanding, Google is hot in pursuit of state governments, taking lessons learned from LA and applying them to new contracts.

Google Gets Back on Track in Big States

According to a Google spokesperson, the company now has Google Apps government customers in 30 states. Last week, Google announced that the state of Wyoming is moving all 10,000 state government employees to Google Apps for Government and will be done with the migration in one year. Wyoming will be the first state in the country to have all state workers using Google, and it estimates the move to Google Apps will save taxpayers $1 million annually.

"The state of Wyoming's decision is the result of a two-year competitive evaluation process that included Microsoft," says Google spokesperson Andrew Kovacs.

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Cloud Computing and Open Source

Any new technology market has its own lifecycle and rhythm.  From mainframes, through smart phones, there’s the early years, the rapid growth, some slowing down and inevitably a decline.  Some technologies never go away completely (e.g. mainframes), while others never really get a foothold (insert your own example here).

Open source was a software movement that began as an idea and now dominates how many new software offerings are marketed and sold. Open source is not a technology, but a business and legal framework within which technology is propagated.  Still, the biggest companies in software are largely closed source – Oracle, SAP, etc.  

Nearly all specialty vertical apps (e.g. trading systems) are closed source.  Whereas most new development technologies including databases and tools are open source.  Given that open source is more a legal construct which bleeds into sales and marketing, it’s highly likely that there will be both open and closed source models co-existing for any foreseeable future.  Further, open source shrinks the size of the industry from a revenue perspective by default  (though paradoxically, software spending is up this year even in this economy).

What about cloud computing?  Will there still be the need for the cloud modifier in the future?  In the past most infrastructure was sold directly to the users under a capex spending model – this includes servers, databases, operating systems, etc.  Of total infrastructure spending in 20 years, how much will still be for on-premise capex, and how much for cloud opex?  Will economies of scale drive infrastructure in the cloud to a point where the infrastructure market will shrink in both real and nominal terms?

Will the purveyors of servers, networking and core infrastructure software sell 90% of their wares to cloud companies?  Will what we currently call  ”cloud computing” be  just plain “computing” in the future?  Time will tell, and it will be a long time before the cloud distinction becomes superfluous, but it will be interesting to watch.

Original Article - http://cloudcomputing.sys-con.com/node/1103679