Is Google Loosening Microsoft’s Stranglehold?

Right now, if you are a large organization you are most certainly a Microsoft customer. But can Microsoft maintain this tight grip on the market indefinitely? Not if Microsoft’s competitors continue to muscle their way into large organizations whose doors were once blocked from entry.

Why should you be interested in the leveling of the playing field between Microsoft and other potential vendors? Increased competition in this landscape will allow you to enhance your organization’s leverage with Microsoft (even if the move is from “none” to “some”). It should also incentivize Microsoft to become more of an innovator (we are starting to see this now with the flurry of “new” versions rolling out at a much faster pace than in the past.). This is especially important considering the fact that many organizations are struggling to justify paying software assurance as a large portion of the benefits associated with software assurance are tied to the upgrade rights.

Although Microsoft has publically scoffed at the notion that their current enterprise dominance faces any true threat from the likes of Google (Google Apps), VMware (virtualization), Linux/open source (client and server operating systems), IBM (database, Lotus Notes), Oracle (database) etc., its actions suggest otherwise. For example, in an attempt to address increased adoption and acceptance of Google’s solutions, Microsoft recently cut Office 365 prices and transformed how it is presented and ultimately sold.

Google’s threat of stealing the ever valuable market share from Microsoft is not just theoretical or something that is confined to small businesses anymore. Already Google (i.e. Google Apps) has signed major deals with Costco Wholesale Corporation and Roche Pharmaceuticals, the sorts of companies that Microsoft historically would not have been worried about losing to a competitor. Google Apps is clearly gaining an audience made up of CIOs at large organizations who would have, in the past, overlooked it as a web-based solution for only small companies to play around with and not even worth considering for their large organization

The question now becomes, is Microsoft’s position of dominance really in jeopardy? For the time being Microsoft is doing just fine. During its most recent earnings call it posted revenue of $18.6 billion for its 4^th quarter, up 7% or $1.2 billion. Microsoft will not lose its position of dominance today… and maybe won’t any time soon … but in the future, alternatives like Google will most certainly become true competitors of Microsoft and viewed as a legitimate threats to market share, thus significantly altering the competitive landscape in a manner that will be positive for everyone involved (well, perhaps not Microsoft).

During your next dealing with Microsoft, follow this 6 month timeline to ensure that negotiating with Microsoft is not an oxymoron.