It seems Office 365 might have what it takes to challenge Google. But things might not be that simple, says Tim Ferguson.

Microsoft has launched its Office 365 suite of software-as-a-service (SaaS) applications as it bids to take on Google Apps, and on the face of it Microsoft’s technology could have the edge over Google’s.

Office 365 combines Office Web Apps – online versions of Excel, Outlook, PowerPoint and Word – with web-based versions of the Exchange email system, SharePoint collaboration platform and Lync unified communications tech, previously part of the Business Productivity Online Suite (BPOS).

Microsoft Office 365's success isn't guaranteed

Microsoft’s big software-as-a-service push, Office 365, faces competition but not just from GoogleImage: Microsoft

Lync in particular is more comprehensive than Google’s offering because it offers more advanced videoconferencing and web meetings. Office 365’s Excel and SharePoint applications also appear more sophisticated than Google’s versions.

Another factor in Office 365’s favour is the familiarity people have with Microsoft technology. Although there are plenty of Google Apps users, the interface isn’t as familiar to people who have been using Microsoft software for years.

Organisations that have previously shied away from Google Docs due to the unfamiliar interface could be tempted into using Microsoft’s SaaS applications as they’ll be in a format they’re used to.

Google Apps admittedly has a number of advantages over Office 365, including a slightly cheaper price point. The Google technology is also better for more simple collaboration tasks through Google Groups and Docs.

So overall, Office 365 technology seems more sophisticated, complete and familiar – significant factors that, all things being equal, could make it superior to Google Apps.

But Microsoft’s huge on-premise technology presence means things aren’t equal. The challenge for Microsoft with Office 365 isn’t to provide a better product than Google, it’s convincing users of its on-premise technology that shelling out for Office 365 is worth it.

Microsoft already has plenty of BPOS users and there’s little reason why these customers won’t continue using it now it has become Office 365.

But can Office 365 move the use of its SaaS technology beyond those already using BPOS? I’m not so sure.

Organisations paying to use on-premise versions of Office are unlikely to…

…want to pay an additional subscription fee for users to have access to online versions of the same applications when there is other free technology that enables documents to be shared and worked on collaboratively.

Documents created with on-premise versions of Microsoft technology can be easily shared internally using SharePoint and externally through third-party technologies such as Dropbox.

Microsoft is attempting a hybrid approach that mixes on-premise with Office 365 but many businesses might not see the point of having both when other free technology is available.

And even though Microsoft says more than 200,000 organisations have downloaded the free beta version of Office 365, this is no guarantee that a similar number will be prepared to pay for it.

Unless organisations have found real business value during their use of the beta version, they may feel that the on-premise technology they have, combined with free online collaboration tools where relevant, will suit their needs.

Where Office 365 makes more sense is for small businesses that don’t want to shell out for expensive licences that they’re then locked into. A subscription fee that allows them to move off a service with a month’s notice could be attractive.

But businesses in this situation are likely to already be using Google Apps, which is cheaper – a critical factor for small businesses for whom every penny counts – and with which they will be familiar.

Companies already using Google Apps will probably stick with it rather than move to Office 365, unless they’re desperately craving a more sophisticated set of online services such as SharePoint or Excel.

With Office 365, Microsoft is making sure it has all its bases covered but I’ll be surprised if it becomes a hugely significant part of the company’s business in the short term despite the importance the company appears to be placing on it.

Cloud computing and SaaS are never going to be something all companies rely on completely and so the on-premise software from which Microsoft derives the vast majority of its business revenue continues to provide a healthy income.

So although Office 365 provides a set of services that appear more sophisticated than Google Apps, the situations in which it makes more sense to use Office 365 rather than Google Apps may be few and far between.

Microsoft users will probably dabble in the revamped services but continue to rely on on-premise technology as their main way of working, while users of Google Apps et al will need more persuasion if they’re to ditch the cheaper alternatives they already use.