Google. Microsoft. Cloud Based Apps. Fight!

So Microsoft is feeling the heat from Google Apps.

Must be the case if Monkey Boy’s Microsofties have decided to go for an all out attack on the Gnomes of Mountain View.

Microsoft recently released a video telling Monkey Boy truths about Google Apps.



Now while I don’t necessarily believe that Google Apps is the greatest thing since Cuban Cigars and Premium Vodka, its not a bad product and it has a pretty good price point story to tell.

The truth is that Office 365 is very expensive, especially in Australia.

Now a friend of mine showed me a couple of emails relating to Office 365 discussions he had with Telstra before he told them to get a grip on reality.

The first, and biggest question was based around the variation in cost between most of the world and Australia. Across the planet the cost, predominantly, equates to USD$24 per user per month, for the plan he was looking at, in Australia its AUD$40.10 per user per month for the same plan.

As I write this the exchange rate is hovering around USD$1=AUD$1.06.

This means that it should be costing around AUD$22.64 per user per month. Its a cloud service, no boxes to move, distributors to take a cut, product to feeight into the country, DVD’s to produce, packaging to manufacture and so on so where’s the price differential?

I mean the data centre that runs Office 365 for Australia is in Singapore and is the same one that is used in Singapore where the cost is $24 per user per month and in the absence of anything else it looks like its priced in the local currency.

So what was the explanation from Telstra for the price variation?

As to pricing differences between AU and US, It is a common practice by all multinationals to have price discrimination based on Geography. If you compare the prices of Petrol, iPods, TVs Big Macs, there is a price discrepancy based on the purchasing power of that that country.

We still believe that purchasing Microsoft Online Services will be more cost effective than on premise software. But also consider this, the Australian currency is the 4th most traded currency. Between July and October 2008 our currency fell from 97c to 61c.

Hmmmmmm…..

So the strongest argument Telstra had was that ‘all multinationals to have price discrimination based on Geography’, unless you live in Singapore, in Russia the price converts to USD$30 per user per month, and that three and a half years ago the Australian dollar fell from 97c to 61c.

Sorry but that’s ancient history.

Here’s the thing AUD$40.10 converts to USD$42.75. So if we use USD$25 per user per month as a base price someone in Australia is levying a massive tax on all Australian businesses to use a product that supposed to help reduce costs.

Lets do the math.

A business of 100 staff in the US will pay $2500 per month or $30000 per year to use the cloud based Office 365.

A business in Australia with 100 staff will pay $4010 per month or $48120 per year to use the same product running on a data centre ‘out there somewhere’.

Convert the annual US price to Australian dollars at todays exchange rate and the price becomes $28122 per year.

So it costs an Australian company $19998.00 per year more to use Office 365 in Australia than it does in the United States for an equivalent number of users.

No wonder Microsoft is taking aim at Google Apps.

The Apple Double Play.

I just finished reading an article in PC Magazine that really got me thinking.

The piece was entitled ‘The Apple Product That Really Worries PC Vendors’.

It really got me thinking, especially in light of the fact that the Commonwealth Bank recently decided to arm their staff with MacBook Air laptops.

The interesting this about this was the following:

Branch visitors were free to use iMac, iPad, iPod and Asus touchscreen devices to browse foreign exchange rates, products, and to make appointments with CBA specialists – much like how Apple customers arranged to visit the vendor’s ‘Genius bar’.
The bank also planned to replace internal Dell desktops with MacBook Air notebooks nationwide, allowing employees to choose to operate on either Mac OS or Windows platforms.

Wow! I really mean WOW!

Think about this in terms of the the information from Canalys that I mentioned in this post ‘Wintel Market Share Slips’.

The Commonwealth Bank, the guys who hung on to OS/2 for years past its expiry date are doing a widespread deployment of Apple MacBook Air laptops. This is astounding news.

Here’s the really amazing potential - lets assume that they replace all 4000 Dell laptops with the MacBook Air. Here’s the really interesting maths:

4000 copies of Windows 7 Entreprise, even at the best possible price couldn’t be less that $175 a copy, lets call it $150 just to keep the calculations simple. Lion is $31.99.

That means a saving on OS upgrade costs of $472,040.

Half a Million Dollars saving on an Operating System upgrade!

Where would you want the half million, on your bottom line or on Microsoft’s?

Careful of your answer, your shareholders are watching.

There's no inevitability as long as there's a willingness to think

I was back in Brisbane. My third trip, and, sadly, things weren’t improving.

The Financial Controller was still meddling in technology stuff and the IT guys were watching their jobs and their employer get flushed down the sewer by this stupid bean counter.

It was a recipe for disaster.

I actually felt sorry for the owners of the business. It was a family run operation and the board was made up of three family members, the Financial Controller and a friend of the family who was reasonably successful in his own right.

They were really clueless about technology and had trusted the Financial Controller. They got taken for a ride by someone who should have stuck to what they were good at rather than getting involved in something that they were hopelessly ill equipped to deal with.

The final straw for me was the cost of conversion moving to a complete Windows monoculture was massive.

While the Financial Controller was busy explaining to everyone that there were huge benefits from using Windows. George and his crew were seeing budgetary estimates rise quickly.

The root problem was the demand to go to a Windows monoculture. Had they stayed with the mixed environment they had, upgraded their Windows XP devices to Windows 7 as well as spend some money on addressing the few shortfalls they had in the environment they would be spending around $55,000.

Taking everything out and replacing it with Windows from start to finish was going to cost the company in excess of $425,000 - and here’s the thing - after spending all this money they’d have exactly the same capabilities that they had with their old environment.

That’s right. No net change in capabilities or functionality. A lot of money gets spent and nothing changes.

Now there’s a real strategy for success.

I was invited to a board meeting by the Financial Controller to provide my opinions regarding the migration.

This was going to be an interesting board meeting.