Google Apps vs. Microsoft Office 365: What do the assumed market shares really tell us?

August 21, 2013 |

The blog of UserActivion compares at regular intervals the spread of office and collaboration solutions from Google Apps and Microsoft Office 356. I have accidentally become aware of the market shares per industry, thanks Michael Herkens. The result is from July and shows the market shares of both cloud solutions for June. The post also shows a comparison to the previous month May. What stands out here is that Google Apps is by far in the lead in any industry. With the size and general dissemination of Microsoft that’s actually unusual. Therefore, to take a look behind the scenes make sense.

Google Apps with a clear lead of Office 365

Trusting the numbers from UserActivion, Google Apps has a significant advantage in the sectors of trade (84.3 percent), technology (88.2 percent), education (77.4 percent), health care (80.3 percent) and governments (72.3 percent).

In a global comparison, it looks similar. However, Office 365 has caught up with May in North America, Europe and Scandinavia. Nevertheless, the current ratio is, according to UserActivion, at 86:14 for Google Apps. In countries such as Norway and Denmark is a balanced ratio of 50:50.


Source: useractivation.com


Source: useractivation.com

Do the Google Apps market shares have a significance?

This question is relatively easy to answer. They have a significance on the dissemination of Google Apps. However, they say nothing about what sales Google makes with these market shares. As measured by this, the expected ratio between Google Apps and Office 365 looks a little different. Why?

Well, Google Apps has become such a big market share because the Google Apps Standard version (no longer exists) for a given number of users and the Google Apps for Education could be used for a very very long time for free of charge. The Education version is still free. This naturally leads to the fact that also a lot of users who have their own domain, have chosen a free Google Apps Standard version, which even after the discontinuation of the version may continue to be used. The only limitation are the maximum users per domain.

So it comes, for example, that only I as a single person have registered nine (9) Google Apps Standard accounts over the last years. Most of them I still have. I currently use two of them (Standard, Business) active and pay for one (Business).

The Google Apps market shares must therefore be broken down as follows:

  • Google Apps users.
  • Not active Google Apps users.
  • Active Google Apps users who do not pay.
  • Active Google Apps users who pay.

If this ratio is now weighted and applied to the market share in terms of turnover, Microsoft would fare better. Why?

At the end of the day it is about cash. From the beginning Microsoft has nothing to give away. Admittedly Office 365 can be tested for free for a short time. Subsequently, the decision is made for a paid plan or not. This means that it is assumed that each Office 365 client, who no longer is in the testing phase, at the same time is an active paying user. Surely Google receives from the non-paying active users insights about their behavior and can place a bit of advertising. But the question remains how much that really matters.

This does not mean that Google Apps has not widely prevalent. But it shows that the strategy of Google rises at least in one direction. Give away of accounts for free to get market share pays (naturally). It also shows that market shares are not simultaneously mean profitability. Most people like to take what they get for free – the Internet principle. The fact that Google has to slowly start to monetize its customer base can be seen by the discontinuation of the free standard version. It appears that the critical mass has been reached.

Compared to Google Apps, Microsoft was to late with Office 365 on the market and must catch up once strong. On top of that Microsoft has (apparently) nothing to give away. Assuming that the numbers of UserActivion are valid, another reason may be, that the website and the offer of Office 365 – compared to Google Apps – are far too opaque and complicated. (Hint: Just visit the websites.)

Google copied the Microsoft principle

In conclusion, based on the UserActivion numbers, it can be said that Google is on the best way to apply the Microsoft principle to itself. Microsoft’s way into the enterprise went over the home user of Windows, Office and Outlook products. The strategy worked. Who even works in the evening with the known programs from Redmond has it during the day at work much easier because it is so familiar. Even the recommendations for a Microsoft product by the employees were inevitable. The same applied to the Windows server. If a Windows operating system is so easy to use and configure, then a server can not ultimately be much more complicated. With it the decision makers could be taken on board. A similar principle can be seen at Google. Google Apps is nothing more than a best of the Google services for end users, GMail, GDocs, etc. packed in a suite. Meanwhile, the dissemination of these services is also relatively high, thus it can be assumed that most IT decision makers are familiar with it, too. It is therefore interesting to see how the real(!) market share between Google Apps and Office 365 to develop.

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Category: Analysis

About the Author ()

Rene Buest is Senior Analyst and Cloud Practice Lead at Crisp Research, covering cloud computing and IT infrastructure. He is member of the worldwide Gigaom Research Analyst Network, top cloud computing blogger in Germany and one of the worldwide top 50 bloggers in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter. For more than 16 years he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies. Rene Buest is the author of numerous professional cloud computing and technology articles, speaker and participant of experts rounds. On CloudUser.de he writes about topics from the fields of cloud computing, it-infrastructures, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn.

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