Office 365 'momentum' announcement met with some skepticism

IDG News Service - Microsoft's declaration this week that Office 365 is enjoying unprecedented levels of sales success didn't fully convince some industry experts who were expecting the company to back up its claims with more concrete figures and who feel it's too early for a victory lap.

Office 365, a cloud collaboration and communication suite for organizations launched in June, is selling eight times faster than its predecessor, the Business Productivity Online Suite (BPOS), and is on track to become one of the company's fastest-growing products ever, Microsoft said on Tuesday.

Still, IDC analyst Melissa Webster was left wanting more specific data about Office 365's performance on the market.

"What Microsoft hasn't shared is user or revenue statistics, so it's hard to judge how much traction Office 365 is getting," she said via email.

Webster doesn't put much weight on the fact that Office 365 is proving much more popular than BPOS did. "When BPOS launched, interest in cloud collaboration solutions was only nascent, and Microsoft's offerings weren't easy to buy/consume SaaS [software-as-a-service] plays," she said.

Gartner analyst Matthew Cain views this week's announcement less as an organic consequence of early sales success and more as a competitive response to Google's Atmosphere conference, held two weeks ago and attended by about 350 CIOs from around the world.

At that event, Google announced product improvements and customer wins for Apps, its cloud communication and collaboration suite, which competes directly with BPOS and Office 365.

"Microsoft's Office 365 momentum announcements, which are clearly in reaction to Google's Apps momentum announcement, demonstrate the high-stakes game being played out for ownership of the enterprise collaboration cloud," Cain said via email.

Prior to the launch of Office 365, Microsoft was criticized for years for not having a strong rival to Google Apps and for being slow to catch on to the shift to the cloud model in business software, aimed at organizations that don't want to install and maintain applications on their own servers and end-user computers, preferring instead to access them via the Internet from vendors' data centers.

It's still not clear who will end up dominating this nascent market for cloud collaboration and communication suites, but Google Apps has been an option since 2007, and Google has been aggressively boosting its enterprise features in the past two years or so to attract the attention of CIOs and CTOs at large companies.

Of course, Microsoft has been a leader in the older and much larger market for communication and collaboration software that is installed on customer premises.

Both Office 365 and Google Apps offer a suite of email, calendar, office productivity software, IM and other tools hosted on their respective data centers, but they also differ in several ways, including most significantly that Google Apps is designed to be mostly cloud-based while Office 365 has been designed with a hybrid cloud/on-premise model in mind.